Hero MotoCorp Diversifies Into Electric Three-Wheelers With Euler Investment

Hero MotoCorp Ltd. has diversified into electric three-wheelers for the first time to brave the headwinds afflicting its traditional and electric two-wheeler businesses.

India’s largest two-wheeler maker plans to invest in more tranches, up to Rs 525 crore, in Euler Motors Pvt. Ltd., according to an exchange filing on Thursday. The investment, a mix of primary and secondary transactions, will give the Splendour maker a “significant” stake in the New Delhi-based electric three-wheeler maker.

“This investment allows Hero MotoCorp to venture into a rapidly growing electric three- and four-wheeler market while unlocking adjacent business opportunities and continuing to cement its leadership in the future of sustainable mobility,” Executive Chairman Pawan Munjal said in the filing.

Euler Motors is engaged in the design, manufacturing and sales & service of electric three-wheelers. They recently launched their first electric commercial four-wheeler.

Hero MotoCorp’s diversification plan comes less than two months after the company spun off its EV unit—EV & Emerging Mobility Business Unit—into a fully independent and empowered unit under the mentorship of Munjal.

That, when its Vida brand of electric scooters is going nowhere. Only 2,678 units were sold in February, even as the competition in Bajaj Auto Ltd. and TVS Motor Co. Ltd. sold nearly 10 times as much. Even associate firm Ather Energy Ltd. clocked 11,807 units.

“Munjal has definitely realised one thing: that they were too late to get into scooters,” an analyst, who has tracked and worked in India’s automotive space since 2012, said on the condition of anonymity since he isn’t authorised to discuss company-specific info. “This (EV business) is another opportunity for him to, you know, make a mark in this segment, especially with respect to electric scooters.”

Yes, Hero MotoCorp’s EV sales nearly quadrupled in 2024 but they were a tenth of market leader Ola Electric Mobility Ltd. Even Ather Energy sold nearly three times as much.

To be sure, electric EV penetration in the three-wheeler space has already reached the inflection point. Nearly one out of three passenger autos sold in India is battery-powered. Overall, EV penetration in the three-wheeler space—passenger plus cargo—stood at 56.6% in 2024, as against 6.1% for two-wheelers and 2.4% for four-wheelers.

On Thursday, Hero MotoCorp shares rose 1.73% to Rs 3,596.90 apiece on the BSE even as the benchmark Sensex ended the day 1.19% higher at 76,348.06 points.