Hero Electric (HE) is different from Hero Motocorp that we all know. HE belongs to Vijay Munjal, the cousin brother of Pawan Munjal and is currently run by Vijay’s son Naveen Munjal.
HE was amongst the 1st ones to have targeted EV space in India – working on it for last 15 years. Currently there is also a dispute happening between HE and Hero Motocrop about usage of Hero Electric brand name where the former claims all the associated rights to it.
M&M and HE’s arrangement entails the following –
- Mahindra will contract manufacture HE’s electric bikes at it’s Pithampur plant. This is in addition to HE’s own existing manufacturing facilities and hence is more targeted towards future growth than current requirements.;
- Mahindra will also allow HE to utilise’s it’s supply chain to push HE’s products across India;
- Both will work together on developing newer technologies and products; and
- HE’s technology will be utilised to electrify Mahindra’s Peugeot motorcycles.
- Partnership is initially for a period of 5 years. Over this period, value of the arrangement is expected to be in the range of Rs 140-150 crore only
I will consider the arrangement more of a trial run at this stage, whereby both partners will look at each other more closely – Mahindras especially.
Mahindras would be keener to look at the overall technology with HE, given that they have been working in this space the longest. HE, if has the right technology, can expect increased support from Mahindras operationally and financially. However, if Mahindras don’t find them interesting, HE would be on their own sooner than they would be expecting right now.
Mahindras have a long proven track record on tie-ups – Ford, Reva, SsangYong. Best products from Mahindras are mostly developed in their own labs – inspirations though might come from tie-ups/ acquisitions.