Hero Motors charging up e-bicycles with ₹1,000-crore investment plan

Nandana James Mumbai | Updated on August 14, 2019

Will strengthen its manufacturing unit to meet global demand

Hero Motors Ltd aims to be the world’s largest electric bicycle maker in the next 12 quarters, said Pankaj M Munjal, Chairman and Managing Director, Hero Motors Company (HMC).

Hero Cycles aims to manufacture 500,000 electric bicycles by the end of FY22, with most of the line utilisation planned for exports.

Hero Cycles is the flagship company of the HMC group and Hero Motors is one of the manufacturing units of the HMC group, which has its manufacturing plant in Ghaziabad, with a production capacity of 8,000 e-bicycles per month. Hero Motors also supplies automotive parts to various automakers.

“Hero Cycles will be globally competitive and focussed on e-bicycles. We will be identified with e-bicycles...Our focus is on becoming global, dominant players of e-bicycles,” Munjal told BusinessLine

Lectro brand

Hero Cycles’ electric bicycle brand Lectro started selling in India in November 2018. “With over 35 per cent of the population still walking and over 17 per cent using two-wheelers to cover under trips under 5 km, there is a great potential to increase/ induce adoption at the price point Lectro is available at, as compared to most electric vehicles available in India. If EV as a category has to grow and achieve its overall objectives, it has to be adopted by the masses,” said Munjal.

Hero Cycles first started selling Lectro in the UK/EU, after it acquired UK-based Avocet Sports in 2015. It will continue to use the existing distribution network through Avocet Sports to export and sell Lectro in the UK/EU.

The company is targeting a sale of 45,000 units of Lectro this year, with around 50 per cent to be exported to the UK/EU. Going forward, the company will be looking at exporting Lectro to countries other than the UK, said Munjal.

The company is planning an overall investment of ₹1,000 crore in Lectro, which would involve a phased investment directed towards strengthening its global design, R&D and its manufacturing unit in Ghaziabad. The company has plans to upgrade its manufacturing facility to support global demand, both in terms of quality and volume, said Munjal.

Retail network

Munjal said that a part of the investment may also be directed towards bringing about a strong retail distribution network. The company also has plans to bring about exclusive stores for retail, though this would be at a later stage, he added.

“We are also in the process of tying up with existing leading global technology players in the fields of motors, batteries, sensors and other e- components, enabling us to manufacture world class products,” said Munjal.

Lectro has clocked sales of 7,000 units in India till now. The base variant is available at ₹17,850 and the high-end model at ₹25,350. The company is planning to launch another model soon which is going to be priced at approximately ₹31,000. The e-bicycles business of Hero Cycles has grown at a CAGR of 50 per cent month-on-month for the past three months, he said.

Munjal said that going by the example of Europe, the electric vehicle revolution in India can start with e-bicycles. “The inclusion of electric bicycles in EV is a strong indicator of its acceptability by the government and the expectation for its adoption by masses by incentivising and subsidies. The lower GST rate (on e-bicycles, from 12 per cent to 5 per cent) after (its) inclusion (as an EV) is also a big plus. All other electric mobility solutions (cars and bikes) are expensive as solutions and hence, electric cycles will be a strong bridge between motorised vehicles /electric cars and bikes,” said Munjal.

Munjal said that if e-bicycles are also recognised under the government’s Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India -II (FAME- II) scheme, it would be an important move from the perspective of manufacturing and the subsidies under it would imply lower an MRP for e-bicycles.

Published on August 14, 2019

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