Hero MotoCorp, the world’s largest manufacturer of two-wheelers for the past two decades, has said in a regulatory filing on Friday that it has invested up to ₹420 crore in Ather Energy, which currently sells electric scooters. The company’s board of directors has approved the investment in one or more tranches, the company adds.

Prior to this new investment, Hero MotoCorp held a 34.8% stake in the Bengaluru-based company, on a fully diluted basis. “Our aim is to expand the Hero MotoCorp brand promise and make EV ownership a convenient, hassle-free, and rewarding experience for customers across the world,” says Swadesh Srivastava, who heads the Emerging Mobility Business Unit of the New Delhi-based two-wheeler behemoth. The company says it is also exploring collaborations with Ather Energy in various spheres, such as charging infrastructure, technology and sourcing.

Ather Energy, which calls itself “India’s first intelligent electric vehicle manufacturer”, was founded in 2013 by IIT Madras alumni, Tarun Mehta and Swapnil Jain. Some of the other marquee investors in the company have been Sachin Bansal, founder of Flipkart and Tiger Global. Hero MotoCorp was an early investor in Ather Energy and has been a part of its journey since 2016. “We were one of the early investors in Ather Energy and have continued to expand our association over the years. We are excited to see the growth of Ather Energy in recent years,” adds Srivastava.

Hero’s additional investment in Ather comes at a time when legacy OEMs are in a tussle with new-age companies vying for the lion’s share in India’s lucrative small-format mobility market—which includes two and three wheelers. According to an estimation by McKinsey and Company, sales of electric two-wheelers could reach between 8 and 9 million by 2030—when they would account for about 35 to 40% of all two-wheeler vehicles sold. “For 2W vehicles, last-mile delivery for food, grocery, and e-commerce is the major demand driver. Other popular 2W use cases include ride hailing and self-driving rentals, with YoY growth of 40% to 50% and 100%, respectively, through 2025,” reads a report by McKinsey.

Hero MotoCorp says it is tapping the emerging opportunity in this market through a slew of organic and inorganic initiatives. Its first Electric Vehicle (EV) is slated to be unveiled in the month of March this year. Hero also has a full-fledged R&D set-up in Jaipur and the Tech Center Germany (TGG) near Munich. The company has plans in place to produce the EV at the company’s manufacturing facility at Chittoor in Andhra Pradesh. Hero envisages building an entire EV ecosystem—from products to technology, to sales, service, customer care, operations, and innovation.

Ather’s products will be rivalled by Ola Electric—a venture which announced Ola Cabs’ founder Bhavish Aggarwal’s foray into green mobility in August last year, with the launch of its S1 and S1 Pro scooters. However, the company was plagued by the ongoing global semiconductor shortage, and was compelled to revise its delivery timelines on multiple occasions.

Aggarwal, on Friday, took to Twitter to announce that Ola Electric will open the final payment window on January 21 for all the customers who have already paid ₹20,000 for its electric scooters. The company had stated last month that it has dispatched its electric scooters to all who have purchased in the previous round. Aggarwal also said in his tweet that the company will dispatch for the latest purchase during this month and February.

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