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Home >Companies >News >Partnership with Gogoro to bolster Hero’s EV business

Partnership with Gogoro to bolster Hero’s EV business

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Hero has not managed to launch an electric vehicle on its own till now. Hence, the success and failure of the new collaboration may have a lot of influence on Hero’s business in the coming days.

  • The tie-up with Gogoro will help Hero set up a lithium-ion battery-swapping stations network across the country, which is considered a more cost-effective way of operating electric two- and three-wheelers

Hero MotoCorp’s recently announced strategic partnership with Taiwanese company Gogoro Inc. can be considered one the most significant steps taken by the management in the last few years. It could help the firm stay relevant in the competitive two-wheeler market in the coming years. The partnership will help Hero establish a network of lithium-ion battery-swapping stations in India for two-wheelers and the two companies will also jointly develop electric vehicles, a segment in which Hero is lagging compared with Bajaj Auto, TVS Motor Company and some startups.

Hero MotoCorp’s recently announced strategic partnership with Taiwanese company Gogoro Inc. can be considered one the most significant steps taken by the management in the last few years. It could help the firm stay relevant in the competitive two-wheeler market in the coming years. The partnership will help Hero establish a network of lithium-ion battery-swapping stations in India for two-wheelers and the two companies will also jointly develop electric vehicles, a segment in which Hero is lagging compared with Bajaj Auto, TVS Motor Company and some startups.

Also, entry-level two-wheelers, where Hero is the market leader, is expected to be the first segment to switch over to electric in the coming years, according to experts. Hero has not managed to launch an electric vehicle on its own till now. Hence, the success and failure of the new collaboration may have a lot of influence on Hero’s business in the coming days.

Also, entry-level two-wheelers, where Hero is the market leader, is expected to be the first segment to switch over to electric in the coming years, according to experts. Hero has not managed to launch an electric vehicle on its own till now. Hence, the success and failure of the new collaboration may have a lot of influence on Hero’s business in the coming days.

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How will this partnership help Hero?

The tie-up with Gogoro will help Hero set up a lithium-ion battery swapping stations network across the country and this technology is largely considered a more cost-effective way of operating electric two- and three-wheelers. The Union government is also promoting this technology to boost sale of electric vehicles in India. Both companies will also get together to develop compatible electric vehicles for the domestic market, which will help Hero establish a foothold in the electric two-wheeler space.

How has the electric two-wheeler market evolved as of now?

Total sales of electric two-wheelers in the domestic market stood at just 143,837 units in FY21 and Hero Electric, a company owned by Naveen Munjal, is the market leader in the space. In FY20, sales were marginally better at 152,000 units. The electric two-wheeler market is also dominated by a bunch of startups such as Ather Energy, and Okinawa Auto Tech. Unicorns such as Ola Electric—a subsidiary of ride hailing service provider, Ola—also plan to make a grand entry into the segment with their products.

Where does Hero stand in EVs?

Hero has showcased its concept electric two-wheelers over the last few years but has not yet launched them commercially. Hero MotoCorp has already invested in Ather Energy, an electric scooter manufacturer, while its promoter, Pawan Munjal, has invested in Ola Electric through his family trust. The company has invested in roping in talent to develop electric technology at its research and development centre on the outskirts of Jaipur.

None of India’s leading two-wheeler manufacturers though has been commercially successful with electric vehicles yet, and the scene is dominated mostly by startups. For Bajaj and TVS as well, volumes have been minuscule compared with the combustion engine ones. These manufacturers, though, are expected to have an upper hand when they scale up the production of their electric products since they have strong brand value, extensive dealer network and an existing set of customers.

How have experts reacted to the decision of Hero MotoCorp?

According to analysts of ICICI Securities, Gogoro is a global leader in urban battery swapping and smart mobility innovation. This partnership could aid acceptance of Hero’s electric products, as capital cost of customers could be reduced significantly (around 30-40%) as vehicles can also be sold without a battery.

“We believe battery-as-a-service (BaaS) could be an additional revenue stream for the JV; access to this in future can be offered to other OEMs, too. Recently other OEMs, such as Honda, Yamaha, KTM, and Piaggio, had also announced setting up a consortium for swappable batteries. We believe this JV is likely to work alongside other HMCL EV investments (Ather)," they added.

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