Hero Electric to expand annual production capacity to five lakh scooters by March 2022 as demand spikes

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Hero Electric, the leading electric two-wheeler manufacturer in India, is ramping up annual production capacity at its Ludhiana facility by five times, to five lakh scooters from the present capacity of one lakh units by March 2022. Witnessing a steep rise in demand, Hero Electric had announced a few months ago that it would increase production capacity to three lakh units, but has further revised that number as sales of electric two-wheelers pick up pace. The company has also said it will continue to increase capacity by 10 lakh units every year, and is targeting a production capacity of over 50 lakh units by 2026.

To provide some perspective on how quickly demand for its electric scooters has risen, Hero Electric sold over 15,000 electric scooters in the first half of 2021, a figure about five times higher than the 3,270 e-scooters it sold in the same period last year. More notably, it sold more than 4,500 e-scooters in July alone, a tenfold increase on the 399 units it sold in the same month in 2020.

A large part of this sharp increase in sales is down to the subsidies being offered by both Central and State governments. In June, the FAME-II subsidy for electric two-wheelers was increased from Rs 10,000 to Rs 15,000 per kWh of battery capacity, with the overall subsidy cap doubled to 40 percent of the two-wheeler's price.

Additionally, several states have announced generous incentives for electric two-wheeler buyers as part of their state EV policies. So significant is the impact of these subsidies in some cases, that Hero Electric's mid-speed scooter range now starts at under Rs 40,000 in Maharashtra and Gujarat.

Hero Electric has also announced it will inaugurate experience centres in major cities in the coming months to further push sales.

Commenting on this development, Sohinder Gill, CEO of Hero Electric, said, "At Hero, we have always believed that the growth in the industry is going to see a hockey stick curve some day and the numbers from the last few months is an index of what is in store. We are witnessing huge walk-ins at our dealerships and are working overtime to avoid stockout situations and long waiting lists. We believe the customer is now actively considering buying Hero E Bikes as a practical and viable alternate to petrol bikes because of attractive sticker price and best in class savings in the total cost of ownership. We are therefore redrawing our business plans to retain our leadership position that we have held all these years."

In July, Hero Electric completed the first part of its Series B funding of Rs 220 crore, which the company will utilise for research and development (R&D), marketing, dealer network expansion, as well as to ramp up its supply chain, service and charging station network.

Also See: Hero Electric targets sales of 1 lakh e-scooters in 2021, to set up new production facility

EV policy impact: Hero Electric scooter prices start at under Rs 40,000 in Maharashtra and Gujarat

Hero Electric sold over 4,500 mid-speed e-scooters last month, more than 10 times its July 2020 figure

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