Hero MotoCorp's EV Push Includes Both Fast Charging And Battery Swapping
Hero MotoCorp Ltd., India's largest two-wheeler maker, will make electric vehicles with either fast-charging or battery-swapping capabilities as it bets on a "multi-pronged" strategy.
The maker of Spendor motorbike is slated to launch its first set of electric vehicles towards the end of this fiscal. These will be mass-market and with a fast-charging capability, Niranjan Gupta, chief financial officer at Hero MotoCorp, said in an investor call. A swapping-based scooter will be coming out by the end of the 2022.
“We do believe that moving forward for EV category to evolve rapidly, customers will need to have both fast charging option as well as swapping option," Gupta said. "That's why you will see a lot of actions in the next calendar year on EV front from our side.”
Hero MotoCorp will rely on its distribution reach to dominate the electric two-wheeler market. It has already partnered with Gogoro to build battery stations across the country for a swapping model. Separately, it has invested in electric scooter maker Ather Energy Pvt.
Peers Bajaj Auto Ltd. and TVS Motor Ltd. already have at least one battery-powered variant, while Ola has also developed an electric scooter. That comes amid the government's push to EVs through more incentives under the second phase of its FAME scheme, while states too are offering additional benefits.
While Hero MotoCorp is a late entrant, Gupta is confident that the company has an advantage because of its large customer base and reach. Investment in Ather Energy will also help the firm to expand its footprint and drive synergies. There will be a closer collaboration with Ather Energy, he said.
“There are multiple opportunities of collaborating, whether charging or the backend side," he said. "We see that as a strategic investment, and that's how we've been participating.”
Ready For Cash Burn
Hero MotoCorp said it is ready for necessary investment in EVs.
“We all know that EV category will not be profitable from day one. So it will require some bit of investments or in other words you can call it cash burn,” he said. Compared to peers or any new comer, Hero MotoCorp is in a much better position and will get more out of its investment because of scale of buying, manufacturing, and existing reach, he said.
Gupta said the will spend half of its yearly capex of about Rs 750-1,000 crore on electric vehicles, premiumisation and international expansion.
But only EVs will see cash burn, while its transitional business continues to be the cash cow, he said. “We see EVs to be incremental to our top line.”