Hero Electric has secured Rs 220 crore in Series B funding backed by Gulf Islamic Investments (GII). The first portion of the investment, which also included current investor OAKS, comes two and a half years after the electric two-wheeler manufacturer obtained its initial fund worth Rs 160 crore from Alpha Capital in December 2018. In a statement, the company stated that this capital will be used to focus on the Electric Vehicle sector as well as India’s EV ecosystem. Hero Electric retained Avendus Capital as its main financial advisor on the deal.
In order to concentrate on the ‘explosive growth’ in demands for its electric two-wheelers, the company is also looking forward to boosting its research and development (R&D), marketing, distribution network growth, as well as increasing its supply chain, service network, and charging points.
Over the next four years, Hero Electric plans to inject at least Rs 700 crore to increase annual manufacturing capacity from roughly 75,000 units per year to more than 1 million units. These new capacities will be built in two or three places, one of which will be located nearer to a port, making exporting cheaper. With more than 3.5 lakh electric two-wheelers in India, Hero Electric now offers over 700 showrooms and service centers across the country. Hero Electric has outlined itself as a market leader in the country’s electric vehicle sector and is strongly aligned to grow at a multi-fold expansion in the coming years.
Surprisingly, the funding comes as competitor Ather Energy, which is sponsored by Pawan Munjal’s Hero MotoCorp, has been vigorously raising funds to expand its operations. Ather secured Rs 260 crore in its Series D funding round led by Sachin Bansal in November 2020. Hero MotoCorp, which apparently owns more than 37% of the company, also took part in the investment round.
Naveen Munjal, Managing Director, Hero Electric stated that “The electric vehicles market has undergone tremendous change over the last few years since we raised our first round of funding. The policies are extremely conducive for the growth of the segment and despite the pandemic, the company is poised to grow at over 2X from the last fiscal.” He further added that the company is planning for the predicted exponential rise in sales in the future, with the FAME II initiative increasing support for electric two-wheelers and thus quickening requirements.
Ola, a Bengaluru-based ride-sharing platform, has also expressed curiosity for the electric two-wheeler market and announced a Rs 2,400 crore commitment for the development of an electric scooter manufacturing facility in Tamil Nadu, which is expected to be the world’s largest scooter production plant with two-million-unit annual production output.
