New Delhi: India’s reigning electric two wheeler market leader Hero Electric has said it does not foresee a fall in its market share following the big bang entry of Bhavish Aggarwal’s Ola Electric which is expected to expand the domestic market.
Hero Electric managing director Naveen Munjal told ETAuto that 2021 would be an inflection point with the electric two wheeler industry likely to double every year henceforth but Hero would firmly be in the pole position. The company sold around 54,000 two wheelers in fiscal 2021, which gave it a market share of over 37 percent and is targeting sales of over 100,000 units this year.
While it has taken it around 15 years to get to this level, Ola Electric has said it has already received bookings of over 100,000 units for its S1 scooter, which was launched on Sunday and would hit the roads in October. Ola’s factory would at the very outset produce a million units every year.
“I don’t believe our market share is going to come down dramatically,” said a combative Munjal. “We’re taking a number of steps to keep the customer engaged in order to expand the market, our dealer network, getting the products with the customers. There are a lot of steps that we are taking.”
“We know what we’re doing. We’ve been in this market long enough and automotive sector is different, it involves a lot of backend, strong supply chain, a robust manufacturing network and at the front end –a dealer and service network and spares availability. Then you have to get the customer to experience the brand with the right blend of performance speed, range and price. I don’t really see this in the competition,” he said. “Of course, there’s going to be shifts in terms of the market shares but that’s not a bad thing. But it’s not an issue for us because we believe that markets will expand and eventually the customer will settle down. I’m not really scared or worried of that at this point.”
Of course, there’s going to be shifts in terms of the market shares but that’s not a bad thing. But it’s not an issue for us because we believe that markets will expand and eventually the customer will settle downNaveen Munjal, Hero Electric
Ola is investing Rs 2400 crore in a mega 2 million unit per annum factory that would be ultimately scaled up to 10 million units. To counter that, Hero has lined up its own investment. It is expanding its current facility in Ludhiana from just 75,000 units to 300,000 units per annum this year. At the same time, it has started work on a new mega facility which will produce 1 million units per annum and would be ready by 2023. Munjal expects the electric two wheeler market to rapidly expand to around 4 million units per annum by 2026.
High fuel prices and strong incentives from the government with the extension of FAME 2 subsidies and various state governments joining in with their own incentives, has created a strong tail wind for electric two wheeler makers. So much so that for the first time, Munjal is seeing demand far outpace what he can produce in his factory.
“We anticipated a large pent up demand even when the lockdowns were on, so we didn’t stop production even for a single day knowing the demand is going to come. That’s exactly what we’re seeing now. We expect the market by 2026 to have a minimum of about 4 million units or about 20 percent of the ICE industry market. This number could actually increase dependent on certain factors falling in place. So when you look at that kind of growth from 1.5 lakh units last year to about 40 lakh units in the next five years, that’s a substantial jump.”
But with companies like Ola bringing in the scale, Ather Energy backing themselves with technology and a number of ICE industry biggies including Hero MotoCorp about to venture into electric two wheelers, how does Hero Electric intend to stay ahead of the curve? By grinding in the old fashioned way and putting in the pieces on the ground.
The company has for example quietly put in place a charging infrastructure network of 1600 stations, which is being expanded at a fast pace. Similarly it has tied up with over 6000 private garage owners and road side mechanics–reskilling them, so that they can service electric vehicles. It plans to take this number upto 25000 within the next two years. It is a strategy that is starkly different from Ola, which has not invested in dealerships yet and instead intends to provide service to the customers at their homes.
I cannot stress the need for a motivated dealer and service network enough. A lot of things are not purely to do with the product, but about a dealer explaining the concept or how dedicated your service network is and the strength of the brand has a very important role to playNaveen Munjal, Hero Electric
“Electric vehicles are low service, but they’re not no service vehicles. They will also have issues–breakdowns, accidents and other other things which need to be resolved,” Munjal said. “We as a company believe it’s not one versus another but it’s going to be a hybrid–a blended model. You will need to have boots on the ground–a dealer and service network and at the same time, you also need to reach out to the customer in a virtually using digital platforms.”
“I cannot stress the need for a motivated dealer and service network enough. A lot of things are not purely to do with the product, but about a dealer explaining the concept or how dedicated your service network is and the strength of the brand has a very important role to play,” he added. “But the brand that doesn’t have the right quality in this area then all the products mean nothing. We have always been working parallelly on all these aspects. Which gives me the confidence that I don’t think we going to lose market share here.”
Aggarwal counters criticism that startups burn cash and have no roadmap on profitability and says Ola Electric will be profitable soon
The CEO of Ola Electric Bhavish Aggarwal wants complete rejection of petrol and total commitment to EVs. He said India should aim for 50% of global electric two-wheeler production. Aggarwal argues that even with coal-powered electricity, electric vehicles are many times greener than petrol vehicles.
