Hero MotoCorp’s newly announced strategic alliance with Taiwanese firm Gogoro Inc., can be considered one of the company’s most notable moves in recent years. In the coming years, it might help the company stay important in the competitive two-wheeler industry. The partnership will assist Hero in establishing a network of lithium-ion battery-swapping stations for two-wheelers in India, and the two companies will also collaborate on electric vehicle growth, a segment in which Hero lags behind Bajaj Auto, TVS Motor Company, and a few startups.
Experts also predict that entry level two wheelers, where Hero is the industry leader, will be the first to turn to electric in the coming years. Until now, Hero has not been able to launch an electric vehicle on its own. As a result, the success or failure of the new partnership may have a significant impact on Hero’s company in the coming days.
The partnership with Gogoro would assist Hero in establishing a nationwide network of lithium-ion battery swapping stations, which is widely regarded as a more cost-effective method of running electric two and three wheelers. The Indian government is also encouraging this technology in order to increase the number of electric vehicles sold in the country. Both companies will also collaborate to build domestically compliant electric vehicles, allowing Hero to gain a foothold in the electric two-wheeler industry.
In FY21, total sales of electric two-wheelers in the domestic market were only 143,837 units, with Hero Electric, a company owned by Naveen Munjal, leading the market. Sales were slightly higher in FY20, at 152,000 units. A number of start-ups, including Ather Energy and Okinawa Auto Tech, dominate the electric two-wheeler industry. Unicorns like Ola Electric, a subsidiary of ride hailing service provider Ola, aim to enter the market with their own goods.
Over the last few years, Hero has shown off its prototype electric two-wheelers, but has yet to commercialise them. Hero MotoCorp has already invested in Ather Energy, an electric scooter manufacturer, and Pawan Munjal, the company’s promoter, has invested in Ola Electric through his family trust. At its research and development centre on the outskirts of Jaipur, the company has put money into attracting talent to grow electric technology.
However, none of India’s major two-wheeler manufacturers has yet to achieve commercial success with electric vehicles, and the market is dominated primarily by start-ups. Volumes for Bajaj and TVS were also insignificant, as compared to those for combustion engines. However, since they have a high brand value, a large distributor network, and an existing customer base, these manufacturers are expected to have an advantage when scaling up production of their electric goods.
Gogoro is a world pioneer in urban battery swapping and smart mobility innovation, according to analysts from ICICI Securities. Since cars can be sold without a battery, this alliance could help Hero’s electric goods gain traction by lowering consumers’ capital costs (by about 30-40%).
“We assume that battery-as-a-service (BaaS) could be a new revenue source for the JV, and that access to it could be made available to other OEMs in the future.” Other OEMs have recently announced the formation of a consortium for swappable batteries, including Honda, Yamaha, KTM, and Piaggio. “We assume this JV will fit well with other HMCL EV investments,” said the experts.
