Hero Electric Vehicles is planning to expand its business and set up a new manufacturing unit. The company will invest Rs 700 crore for this by 2025. In order to part-fund its expansion, the company has raised Rs 220 crore.
Besides increasing capacity at its Ludhiana plant to 3 lakh units per annum from 75,000 units currently, Hero EV is also planning to set up a new manufacturing facility with an annual capacity of 10 lakh units. The company aims to sell 10 lakh units by 2025-26.
Hero EV’s research and development (R&D), marketing, and dealer network will also be ramped up. It will expand its supply chain, service network and charging stations to cash in on what it believes will be an ‘explosive growth’ for its electric two-wheelers.
"What we're doing now is expanding our capacity from 75,000 units to about 3 lakh units. While we are building this up, we're also planning on the next facility which is going to be about a million units per year and that we believe is not very far off now. It's going to be sooner rather than later," Hero Electric Managing Director Naveen Munjal told news agency PTI.
Munjal said that the bare minimum they will spend on the facilities till 2025 is around Rs 700 crore.
Hero EV raised fresh capital of Rs 220 crore in Part 1 of Series B funding in order to fund these activities. The investment round was led by Gulf Islamic Investments (GII). "This is from our existing investor OAKS, which had invested in us in 2018 and a new investor, GII coming in," Munjal said.
He said that they will go for another “much larger” funding round to meet manufacturing requirements and the market. Munjal said Hero Electric is preparing for the exponential growth in sales that it expects going forward, with the FAME II scheme increasing support for electric two-wheelers thereby accelerating demand.
Munjal said that in 2019-20, pre-COVID time, they had sales of about 46,000 units. Despite the disruptions in 2020-21 due to COVID-19, they sold about 54,000 units. “This year we’re targeting 100,000 units... We are at a run rate to be able to fulfil that kind of number this year. Overall, in the next five years between 2025 and 2026, we're looking at sales of a minimum of a million units per annum," he added.
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