With the electric-vehicle (EV) industry expected to vroom with support from the government’s new policies, Hero Electric said it will expand its manufacturing base with a plant in the South over the next two years.

At the same time, it will also invest around ₹500 crore over the next two years on new developments.

“We are looking at the South because that is the market where the stakes are very high, plus that market is strong for us. So southern India is where we will be expanding next, with a modular plant with enough capacity to expand further,” Naveen Munjal, MD, Hero Electric Vehicles, told BusinessLine .

He said that currently, the company is exploring the possibilities in the area, and the plant will most probably come up around Hosur.

Apart from the construction of the new facility, the fresh investment will go into expansion of networks, R&D and development of new models, Munjal said.

The company had announced an investment of ₹700 crore in February last year for new product development and assembly lines, of which a significant amount has been already invested, he said.

At present, Hero Electric has a plant in Ludhiana that has a capacity of around one-lakh units a year for manufacturing electric two-wheelers.

It has a little over 600 dealer outlets across the country in 325 cities, with plans to expand to 1,000 dealers by end of calendar year 2020.

Government support

Speaking about the EVs industry, Munjal said the government is moving in the right direction with the latest announcements in the Budget, as well as through decisions like shifting to electric two-wheelers by 2025 from traditional models under 150cc.

“This is much required in India and should aggressively be pushed through. My only hope is that they (the government) doesn’t digress from this. Whether it is a 30-per cent or 100-per cent achievement by the end of 2025 is a different story, but the direction has to be clear and we want long-term direction,” he said.

He said the announcement of lowering of the GST from 12 per cent to 5 per cent in the Budget will also help generate new customers for the EVs.

More direction needed

However, he said the second phase of Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME-II) should be revised, as it does not support the lower-end of the market.

Munjal also added that there should be some direction for delivery companies (logistics) regarding use of EVs in their fleet.

For instance, Hero Electric has customers such as Domino’s Pizza that are looking at EVs for delivery services.