The virus arrived and wreaked havoc on people and businesses alike. Now while the economy is flexing to reopen, the data points reflect a massive supply chain disruption, demand bottoming out, and alarming layoffs across sectors. However, there’s also a ray of hope that Covid-19 brought along.
As people practiced social distancing and stayed indoors, our skies became clearer, the quality of air improved dramatically – paving the way to clean mobility becoming more mainstream in the expected future. For Naveen Munjal, the architect of India’s electric mobility, this transformation defies the COVID-19 mayhem and holds great promise for cleaner and healthier times ahead.
The visionary leader has been doggedly steering India towards clean mobility for more than a decade now. Today, his perseverance seems to be paying off! The market is on the cusp of expansion and his company Hero Electric stands as a leading manufacturer and ambassador of EV two-wheelers in the country.
In this freewheeling chat with The Blue Circle, Naveen spoke about his foray into EV, the rejections and accolades along this journey, Hero Electric’s national and international roadmap, the need to preserve global supply chains and how clean mobility is our future.
It was way back in 2001 that Hero Electric rolled out its first electric bicycle, but the idea did not take off. At that stage, the market was nascent, technology was not advanced, and the customer didn’t understand much about the value of going electric.
Armed with a deep conviction, Naveen came back in 2004 – determined to bridge the gap between cycles and scooters/motorcycles by introducing electric cycles.
“We made a classic mistake as others made in the past. We did not understand that the customer didn’t want to go from a bicycle to an electric bicycle, he wanted to go from a bicycle to a motorbike or car. We again missed the bulls-eye.”
Hero Electric then worked on their R&D for 3 years and in 2007, launched a range of electric scooters. But in those 3 years – technology too had evolved, with better performance products out there in the market. The EV scooter market had started expanding with more and more players incoming.
A pothole-filled road
By 2009, prospects became brighter for the EV sector. SMEV (Society of Manufacturers of Electric Vehicles) was established and Naveen became its first President. The platform actively started engaging with the government in helping shape India’s EV future.
Then came the financial crisis in 2010 and took the auto sector down south. Aggravated even more by the dollar appreciating and crashing oil prices – the Ministry of Non-Conventional and Renewable Energy withdrew the meager subsidy support it had extended earlier.
It was not an easy road for Naveen, but he stuck to his idea of bringing about a revolution with electric vehicles.
“This was a tough time, especially since there was no supply chain in India. But we decided to stick around. We persuaded the competition not to leave and started servicing their vehicles to keep the industry alive. This earned us a mark of goodwill besides a revenue funnel for our dealers.”
It was in 2013 when the government finally acted – the National Electric Mobility Mission Plan (NEMMP) set a target to achieve 6-7 million sales of electric and hybrid vehicles in India by 2020. It also earmarked an investment of Rs 14,000 crore towards building up an EV ecosystem. This would have resulted in a saving of approx. Rs. 40,000 crore in oil bills.
It was then followed by the FAME scheme (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles) that was launched in 2015, with FAME II that is currently operational.
Though the EV players are encouraged by the government’s push towards ‘Make in India’ and now localization through the ‘Self-Reliance’ mantra, Naveen cautioned that change cannot happen overnight and building automotive supply chains is a long drawn process of design, testing, and validations.
At the international level, Hero Electric launched A2B, a premium brand of Electric Bicycles, which is widely considered one of the pioneers in the EV industry globally.
“We started this way back in 2008-09. We exported to Canada at that time, we also exported our scooters to Switzerland while the batteries were very expensive. Soon, we realized electric bicycles are going to be the prevalent mode of transport in the international market. But we didn’t have the design capabilities to develop products for the western markets. Especially for a category which was nascent at that stage, it made more sense to acquire Ultra Motors rather than developing technologies from scratch and building products thereafter. Even though we have a strong international presence, our focus is more towards India, said Naveen, where they are at pole position and intend to maintain and increase their market share.
Battery and charging infrastructure
As per studies, electric vehicles are expensive because they are powered by lithium-ion batteries. The cost of a battery amounts to 40 percent of the total vehicle cost. Lithium-ion batteries offer high energy density, relatively low self-discharge, and low maintenance. It is a great option in the long run.
“In the last 5-6 years, we have been pushing lithium-ion batteries, since the customer experience is much better. They are lightweight, portable, easily chargeable, and have a long life. Customers have started to graduate towards lithium-ion batteries, in fact it constitutes 90+ percent of our total volume.”
Speaking of charging infrastructure, Naveen shared that they had started with letterbox chargers in Gurgaon, but realized it wasn’t a feasible solution. Today, most Hero Electric two-wheelers come with portable battery packs weighing under 10 kg – feasible to carry to your office or to your apartment to recharge.
“It is the ease of use that we started with, and it is our USP today – many are following this path now.”
Along with their dealers, Hero Electric has installed over 650 charging stations already at Kirana stores and local markets. While it is a slow speed charging station, a customer can avail services at an affordable cost and can run his vehicle for a good 25-30 kilometers, in case there is a need to recharge. The target is to take the number up to over 6000 such charging points by the end of this year. The idea behind this initiative is to offer convenience and eliminate range anxiety issues for customers.
Hero Electric has also seen growth in the B2B/fleet segment. Currently it accounts for about 10% of their sales but Naveen expects it to go to over 30% in the next few years.
Acceleration of EVs in the COVID-19 era
Owing to the increased adoption of hygiene practices, Naveen predicts the use of public transport will decrease, and this is likely to lead to a greater preference for personal vehicles.
After every economic downturn, Naveen said, people tend to gravitate more towards entry-level products, and that spells good news for Hero Electric that offers a wide range of products across different segments.
“We have city-speed vehicles, which are going to run 60-80 kilometers, or in certain cases even 150 kilometers and beyond on a single charge. Our batteries are all portable, you can carry them up to your apartment and/or workplace and charge them the way you would charge your mobile phone. The total cost of ownership is much lower or equivalent to when you use public transport. In a lot of cases, we are also servicing their vehicles at home, thereby offering the maximum level of convenience and safety.”
To help customers buy during the lockdown as well as to activate its 500 plus strong dealer networks, the company has introduced a new online sales platform that has attractive discounts and benefits on offer. Besides, it has also announced a 3-day return offer on all its products. The response has been phenomenal.
“We received over 15,000 initial inquiries, and over 1,000 vehicles were sold in the first phase of promotion. While there were inquiries for lead-acid battery vehicles, these were mainly from the rural areas, where the commute is short, majority of the inquiries from urban centres were more for our Lithium-Ion variants.”
However, while the online medium is expected to witness growth, Hero Electric’s strategy focuses on blending both the online and offline mediums.
“We work very actively with our dealer network to supply vehicles to the customer. We are attracting our customers through the online medium, educating them, giving them tools, but boosting sales through the dealer. Since the electric space is still new, people want to test it before they buy, which is why at-home services and such conveniences are at the forefront.”
A bright future
Clean mobility is definitely the answer, according to Naveen, and the post-COVID-19 era is likely to see a shift in people’s mindset.
“We have quit polluting our air now. Respect the environment for it is paramount.
We cannot go back to the old ways. We must choose the electric way forward!”
“You never want a serious crisis to go to waste. And what I mean by that is an opportunity to do things that you think you could not do before.” –Rahm Emanuel