Leading two-wheeler manufacturer, Hero MotoCorp, has announced plans to increase its stake in Ather Energy, an Indian electric vehicle startup, with a fresh investment of up to $66.5 million. The investment comes at a crucial time for Ather Energy, as it had to face setbacks due to a policy change in the country.
Key Takeaway:
Hero MotoCorp plans to invest up to $66.5 million in Ather Energy, an Indian electric vehicle startup, to increase its existing stake. This investment comes at a critical time for Ather Energy, following a policy change that reduced subsidies for two-wheelers. The electric two-wheeler market in India is gaining momentum, with the potential to address the country’s air pollution issues. Hero MotoCorp’s investment reflects its commitment to expanding its electric vehicle portfolio.
Hero MotoCorp’s Investment in Ather Energy
Hero MotoCorp already holds a 33.1% stake in Ather Energy, based in Bengaluru. In a recent stock exchange filing, Hero MotoCorp revealed that its board of directors has approved a new investment in the rights issue of Ather Energy. The investment is expected to be up to $66.5 million.
Before this investment, Ather Energy had raised a total of $336 million from various investors, including Tiger Global, Sachin Bansal and Binny Bansal (founders of Flipkart), and India’s quasi-sovereign fund NIIF. The startup was valued at $739 million in its previous funding round last year.
Impact of Policy Change on Ather Energy
Ather Energy was on track to achieve revenues of $1 billion by the end of this year. However, the Ministry of Heavy Industries made changes to the subsidy offered for two-wheelers, which affected Ather Energy’s growth prospects. The startup, like many others in the electric vehicle industry, had been benefiting from state and federal subsidies in recent years.
Prior to the policy change, Ather Energy was in talks to close a funding round of approximately $250 million at a valuation of over $1 billion. Binny Bansal, an investor in Ather Energy, even referred to the startup as a unicorn on a podcast. The valuation of Ather Energy in the rights issue is yet to be determined, but Hero MotoCorp indicated that its stake in the company will increase.
Opportunities for Electric Two-Wheelers in India
In India, two-wheelers are leading the way in electric vehicle adoption, as the cost of battery-powered cars remains high for many consumers. With over 70% of the country’s vehicles being two-wheelers, transitioning them to greener alternatives can address India’s air pollution issues. According to consultancy firm Arthur D. Little, electric vehicles are projected to make up around 30% of all vehicle sales in India by 2030.
Hero MotoCorp’s Electric Vehicle Expansion
The increased investment in Ather Energy comes as Hero MotoCorp, the world’s largest manufacturer of motorcycles and scooters, aims to expand its electric vehicle portfolio. The company launched its first electric vehicle last year, indicating its commitment to the electrification of two-wheelers.
