Date:
06 May 2015
| Author: P.Tharyan
Hero Electric is part of the Naveen Munjal controlled Hero
Eco Group which makes electric two wheelers. Based in Ludhiana, the Hero
Electric plant can make 200 vehicles a day. Munjal started his company around
1999-2000 when he forayed into electric two wheelers. The journey for him has
been painful, yet exciting. Painful because government incentives dried up for
this sector a few years back, only to be revived in 2015. Munjal is however
active in the global market after his group acquired UK-based Ultra Motors
which opened the world to the western markets. Hero Eco Ltd controls the UK and
German operations for electric vehicles. Headquarted out of London with a
subsidiary in Berlin, it controls the Swiss and German markets. Hero Eco Inc
controls the US operations for electric vehicles.
Sohinder Gill, Director-Corporate Affairs, Society of
Manufacturers of Electric Vehicles and CEO- Global Business, Hero Eco had told
Motown India recently, “The journey has been very long and tardy. Around 2008,
people used to simply grab electric vehicles. That time the US dollar was worth
around Rs 45. Half of the components were imported and without subsidy dealers
started buying the vehicles. Soon thereafter there were many dealers around the
country for electric vehicles from all manufacturers. We realised that there
were around 28 manufacturers of electric vehicles, of these a majority were
dealers and the rest were serious players. But then later sales took a hit.
Then the government came out with an adhoc subsidiary through MNRE which
demonstrated more than enough that as soon as the government comes with a
subsidy and the threshold price is changed, the volumes go two or three times
higher. It became a very good case study for the government and for us to prove
the point that there is a necessity of bringing down the prices of electric
vehicles which manufacturers cannot do on their own”.
The worst period for Hero Electirc was unfortunately when the
subsidy was withdrawn under MNRE. Electric two-wheeler sales dropped from
100,000 units in 2011-12 to 42,000 in 2012-13 and 21,000 in 2013-14. It will
become difficult for us to survive if the NEMMP subsidies do not come
soon." Good days may just have started for Hero Electric and the Hero Eco
group as a whole.
Electric scooters
suffered a lot in terms of sales in the last couple of years because of lack of
incentives from the government. Can you briefly tell us how badly your company
was hit and what were the numbers for the 2014-15 fiscal and the previous
fiscal too?
The industry as a whole took
a nose dive after discontinuation of AFSTP scheme under MNRE in 2012.
During this scheme Industry had touched 1 lakh units which was a good figure. However
after the discontinuation of this scheme the industry came down to 20,000 units
last year with major E Bike players stopping their operations. Although we
continued to hold the No.1 position in the market, there were hardly any
volumes and any worthwhile competition. Hero Electric is the only company that
continued selling and servicing the products, including those of the
competition, pan India during those tough times.
Here onward with implementation of NEMMP, we expect a major
turn around in EV business, especially in electric 2 wheelers. We are all
geared up to be the leading player in shaping up the electric mobility
revolution in India and contribute the maximum in NEMMP vision of 6 million EVs
on Indian Roads by 2020
With the new
incentives from the government, how do the sales look for your company? How
much more affordable have your products become after this government
initiative?
The government incentive for sure has pumped the much needed
oxygen into our system. The prices of E Bikes have gone down significantly and
there is positive response from the market. Example, one of our best selling
product Maxi is now priced at less than Rs. 20,000 in the Delhi market and the average price of all models are now
Rs.7,500 to Rs.10,000 lower. However, high VAT and road tax in some states is a
dampener that is holding back the breakout of the sales in some states like UP,
Punjab, etc. If there can be a zero VAT structure in all states for EVs, on lines of the notification from the government
that VAT for electric vehicles should be between 0 to 5%, it’ll majorly
complement the efforts of NEMMP in reaching the goal of 6 million per year
electric vehicles by 2020.
Electric two wheelers
have yet to catch on in a big way in the two wheeler industry. What makes you
think that this segment will see a growth in the coming years? Do also share
some plans about your future products.
India is a 2 wheeler nation and a major chunk of population
uses it every day. There is no doubt on the future demands of 2 wheelers which
will continue to rise. Now if the same buyer is given an alternative which is
economical, Eco friendly and more convenient, we don't expect everyone to go
for electric two wheelers but those light users with average daily run of 30Km
to 40Km will consider it. This number is not small but will be the real drivers
for E Bike sales for the time being. Shortly there are plans to bring even High
Speed, High Range E Bikes and motorcycles with Li Ion batteries which will suit
the requirements of medium and heavy users. So with this thought in mind, I
feel we are at the right place at the right time.