Hero Electric raises ₹220 crore to sell over a million electric scooters a year

• The Series B round was led by Gulf Islamic Investments (GII), with participation from OAKS.
• The company had last raised ₹160 crore from Mumbai-based Alpha Ventures in December 2018.
• Hero Electric said it will use this funding to expand production capacity.

Electric vehicle (EV) manufacturer Hero Electric, which focuses on two-wheelers, has raised ₹220 crore ($29 million) in its Series B funding round led by Gulf Islamic Investments (GII). Existing investor OAKS also participated in this round.

Talking about this fundraise, Hero Electric’s managing director Naveen Munjal said that the company aims to sell over one million units annually over the next couple of years. He also noted that the EV market has undergone tremendous change over the last couple of years, especially due to policies being more conducive for growth in the segment.

E-mobility is poised to grow at over two times from the last fiscal year (FY20), Munjal added.

Hero Electric had last raised ₹160 crore ($21 million, at current conversion rate) funding from Mumbai-based Alpha Capital in December 2018. This was the company’s maiden fundraise and was raised to build its second factory. A part of the capital was also used to develop new products and expand its dealership network.

The capital raised in the latest Series B round, the company said, will be used towards expanding production capacity, consolidating market position to strengthen market leadership, investing in technology and growing footprint across India like markets. The electric two-wheeler maker will also focus on India-centric, flexible and cost-effective innovation.

The Gurugram-based company also plans to make significant additions to its manufacturing capacity to achieve the target of 1 million sales annually. It will also set up multiple plants over the next couple of years.

Hero Electric has specified that it will invest at least ₹700 crore to raise annual production capacity to more than 1 million units over the next four years. Currently, its plants manufacture 75,000 units per year. These new capacities will come up at two or three locations, of which one will be located closer to a port for easy export.

“This round of investments which is a first of a larger scheme will help expand our manufacturing capacities, increase R&D [research and development] spends that will enable us to continue to launch innovative products to disrupt the category,” Munjal added.

Hero Electric is owned by Naveen Munjal, a relative of the Munjals of Hero MotoCorp. The company has no business association with the publicly listed company Hero MotoCorp.

Hero MotoCorp is an investor in another EV company Ather, which was founded by Tarun Mehta and Swapnil Jain in 2013. It has been aggressive about its operations as well and closed a $260 million Series D round in November 2020.

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