It may have lost its longstanding market leadership position in the domestic electric two wheeler segment in April, but Hero Electric is confident of wresting it back soon.
Hampered by semiconductor chip shortage, Hero was overtaken by Ola Electric in the electric two wheeler sweepstakes last month. Managing director Naveen Munjal however said the company remains on track to triple sales and regain its leadership position even as chip shortage is likely to impact its operations for a few more months.
“I have no doubts about that. We will absolutely regain our market share and be the largest player in the industry this fiscal,” Munjal said. “Our goal is to triple our sales from last year and we are on track for that. The shortages that we are facing right now are planned shortages. We knew about this. This is a temporary and not a long term challenge. We are still on track of what we had projected and will probably in fact surpass it like we have done in the last few years.”
“In the next few months, I expect the production to stabilise but the demand is still so large that we will not be able to fulfill it entirely,” he said
The company managed to sell around 100,000 units of its city and high speed electric scooters in fiscal 2022 and has set a target of 250,000-300,000 units in the current financial year. It is expanding its existing factory in Ludhiana to achieve an annual capacity of 500,000 units by the end of calendar year 2022. It also has additional capacity available at partner Mahindra’s factory in Madhya Pradesh.
Over the next 5 years, it plans to set up a string of factories to achieve a cumulative capacity of 5 million units as it looks to stay ahead in the fast growing domestic electric two wheeler market. Hero has one of the widest portfolios right now with 14 models on five platforms and plans to launch multiple new scooters this year.
“We will have products coming in both segments–city speed and high speed categories. Currently, city speed is important as that is what the market is asking for but as drivetrains and batteries improve, there will be a shift. For that we have higher end products coming as well. We will cover both ends,” Munjal said.
A number of instances of fire in electric vehicle batteries has rocked the industry and Hero has utilised the lean production month to spread awareness about battery safety.
“When the fires happened there was a knee jerk reaction in the market with consumers getting all wary and scary. We did a battery safety month in April educating our consumers. We explained to them how batteries need to be maintained and of any tell tale signs of a problem. We took a step back as we know the demand is strong and sales will happen but this needs to be addressed and nipped in the bud.”
With its first product hitting the roads back in 2007, Hero has been one of the oldest players in the segment and also a longstanding market leader but the entry of startups like OIa and Ather has shaken up the market. Ola has set up its factory in Tamil Nadu with a starting capacity of 1 million units which it plans to ramp up to 10 million during the course of this decade.
Since December last year, when it started deliveries of its maiden scooter S1 Pro, it has ramped up in quick time turning the heat on the incumbents in the process. In April, Ola benefitted from Hero’s chip shortage woes to become the market leader selling 12,683 scooters with Okinawa in second and Hero (6,570 units) in the third spot. It’s a position no company would want to abdicate.
“Customers are voting with their money. We have the largest market share in the industry and nobody else can claim that,” Ola Electric CEO Bhavish Aggarwal said last month. “There has to be a reason why customers are buying our scooters. They wouldn’t if it wasn’t good. And not just one time customers but we are seeing repeat customers. From one purchase window to the next, demand is only going up. It is actually a matter of whether we can ramp up production in time to satisfy the demand.”
It’s 2022, and it looks like a two horse race at the top of the electric two wheeler race in India.
