Ahead of Hero MotoCorp’s EV launch, Hero Electric ties up with M&M for joint development

With only days remaining for the entry of Hero MotoCorp into the electric scooter market, Hero Electric — run by relatives of the promoter family of Hero MotoCorp — have entered into a five-year agreement with Mahindra & Mahindra, a rival of Hero MotoCorp and one of India’s largest automakers.

Under the contract, Mahindra & Mahindra — which has its own ambitions in the electric vehicle market — will undertake contract manufacturing of Hero Electric’s Optima and NYX electric bikes at its Pithampur plant and facilitate the sourcing of components for Hero Electric’s products from its own vendors.

The two companies also agreed for joint product development and the sharing of expertise and knowledge.

Hero Electric will also help Mahindra & Mahindra introduce electric variants and models under the brand of Peugeot Motocycles’ — a two-wheeler maker that M&M has a controlling stake in.

The value of the transaction is expected to be in the range of Rs 140 – 150 crores over the duration of the contract, said Mahindra & Mahindra.

Hero Electric is one of India’s top electric two-wheeler maker and generated revenue of Rs 556 cr in the nine months from April to December 2021. It suffered losses of Rs 40.60 cr during the same period.

“With this collaboration along with the expansion of their existing Ludhiana facility, Hero will be able to meet its demand of manufacturing over 1 million EVs per year by 2022. This will further enable them to drive adoption of a
cleaner mode of transport,” M&M said.

The two companies said they will target both Indian and global markets.

“Peugeot Motocycles has ambitious plans in the EV mobility space in several regions of the world and particularly in Europe. This strategic partnership will bolster these efforts through joint development and a platform sharing approach leveraging the combined strengths of the two businesses,” M&M said.

“Our R&D Centre in India will be integral to this arrangement as will the manufacturing facility at Pitampur, that already supplies Peugeot with EV products. I see significant value creation on a mutually beneficial basis and look forward to this partnership delivering on its obvious promise,” it added.

The tie-up comes at a time of frenetic activity in the electric vehicle market in India.

“This coming together of two industry leaders is to further enhance the manufacturing capabilities to meet demand and utilize Mahindra Group’s robust supply chain to reach newer centers in the country. The long-term partnership will also see both the companies make the most out of each other’s deep knowledge of EVs and drive new product development in the next few years. We look forward to creating more synergies with them in the near future,” Hero Electric said.

The agreement narrowly predates the entry of Hero MotoCorp, the world’s largest two-wheeler maker, into the EV segment.

Hero Electric has already dragged Hero MotoCorp to the court, claiming infringement of trademark over the entry of the latter into the EV space.