New Delhi: The march of the legacy OEMs over electric-first manufacturers continues in the electric vehicle industry. The stalwarts are already neck and neck with electric-first companies in the two wheeler industry but now, with Hero MotoCorp announcing the acquisition of a strategic stake in Euler Motors, the same trend is getting underlined in the electric three-wheeler (e3w) space too.
Hero’s acquisition in Euler allows its entry into the burgeoning e3w category, with just Rs 525 crore investment and Euler’s distribution network to ride on.
Pawan Munjal, executive chairman of Hero MotoCorp, said in a statement while announcing the investment in Euler that the company’s board has approved a “strategic investment of up to Rs 525 crore (in one or more tranches) in Euler Motor Private Limited. The investment will provide Hero MotoCorp with a strong foothold in the fast growing e3w market, where EVs are projected to account for 35 per cent of total sales in the near future”.
Hero was earlier in talks with Altigreen Propulsion Labs, another electric-first e3w OEM, which was scouting for funds, but talks ended some months back. An industry source said that the parties did not agree over valuation.
Why electric three-wheelers?
The e3w segment has been witnessing exponential growth in the last few months, with passenger e3w penetration expected to jump from about 28 per cent now to about 35 per cent within one year.
The cargo e3w category has seen some degrowth recently but supportive state-level EV policies are expected to jumpstart growth even in this sub-segment in the near term, said an industry expert.
Already, e3w numbers are about 15,000 a month (compared to just 4000-6000 a month last year); passenger e3ws account for a lion’s share at up to 13,000 units a month. Hero’s acquisition of a strategic stake in Euler is expected to give it a foothold in the passenger e3w space.
As of now, Euler has a cargo e3w, a passenger e3w (HiCity) and a small commercial vehicle four wheeler. Also, Hero’s entry into e3w is a move to diversify its product portfolio at a time when many state government policies are supporting this sector.
Take the case of Madhya Pradesh, Chhattisgarh and Odisha–these three have rolled out a policy wherein 70 per cent of ICE three-wheelers being replaced will be converted to electric. The state government will provide a subsidy of Rs 20,000 for customers. This will be over and above the Rs 23,000 subsidy customers are entitled to under the PM-eDrive scheme. So, the overall benefit will be Rs 43,000, bringing down the total cost of ownership and driving e3w penetration.
Besides, the incentives would also mean that TCO (total cost of ownership) will be lesser or equal to that of a CNG vehicle, with the additional attraction of zero running costs for e3w versus the CNG variant.
Industry experts said that Hero already has a large distribution network for its two-wheelers and may not need any fresh investment in creating a new network for e3w; besides, Euler is already present across 30 cities.
Legacy versus electric-first
Hero’s entry follows legacy two-wheeler OEM TVS Motor Company, which announced its foray some months back into what is known as the L5 three wheeler segment. And, within just two months of launch, the TVS King Max has cornered 5 per cent share of the market, pointed out an industry expert.
Old timers Bajaj Auto, Piaggio and Mahindra Last Mile Mobility are already kingmakers in L5.
Recently, Bajaj has upped the game with an e3w variant, which has a larger body and, thus, the capacity to carry more passengers as well as cargo. It has also brought the e3w portfolio under a new brand, Bajaj GoGo, to distinguish between the RE (ICE) and electric portfolio.
The L5 segment is already crowded, with over 100 OEMs, most of them are electric-first. But in 2024, the legacy trio (Bajaj, Piaggio and Mahindra) had cornered more than a fifth of the market in 2024.
Among the electric-first OEMs which sold over 1000 units last year was Omega Seiki Mobility. Two other OEMs crossed the 1000 unit mark: Dilli Electric Auto and Murugappa Group company, TI Clean Mobility.
In yet another indication of the growing heft of the e3w segment, South Korean major Hyundai Motor Company has announced a collaboration with TVS for developing “advanced electric three-wheeler and micro four-wheeler.
Ashhar Idris, National Sales Head at Omega Seiki, had earlier dismissed the threat from legacy OEMs, saying his firm is eyeing 10 per cent market share within the next 12 months. “OSM has the largest product portfolio in passenger e3w with both, stream and stream city. Stream City comes with 15 minute fast charging. We also have multiple options for home charging and a range of 200 km in single charge,” he said. Legacy players have limited portfolios as of now and their products lack load carrying capacity, range and servicing, he had said.
