Hero MotoCorp Invests Rs. 525 Crore in Euler Motors, Ventures into Electric Three-Wheelers

Key Highlights:

• Hero MotoCorp invests up to Rs. 525 crore in Euler Motors.
• The investment will give Hero a 32.5% stake in Euler Motors.
• Euler Motors recently launched its first electric commercial four-wheeler.
• Hero MotoCorp faces challenges in diversifying its portfolio, particularly in scooters and premium motorcycles.
• The company approved the creation of a new non-profit entity.

Hero MotoCorp Limitedhas announced an investment of up to Rs. 525 crore in Euler Motors Private Limited, a company specializing in electric three- and four-wheelers. This investment will be made in several parts, marking Hero MotoCorp's entry into the growing electric three-wheeler market. According to Hero, electric vehicles are expected to make up 35% of total sales soon.

The Rs. 525 crore investment will be a combination of primary and secondary transactions. In the primary investment, Hero MotoCorp will buy equity shares and Series D Compulsory Convertible Preference Shares. This will give them around a 32.5% stake in Euler Motors on a fully diluted basis. Hero MotoCorp may also buy shares from existing Euler shareholders through secondary sales, all within the same investment amount. The deal will be a cash transaction and is expected to be completed by April 30, 2025.

Leadership Insights:

Dr. Pawan Munjal, Executive Chairman of Hero MotoCorp, highlighted the importance of this investment, saying, "Our strategic investment in Euler is a bold step towards realizing our vision to 'Be the Future of Mobility.' This move strengthens our commitment to growth through both organic and inorganic expansion, emphasizing the value of collaboration and adaptability in a changing market."

Euler Motors expanded its portfolio

Euler Motors focuses on designing, manufacturing, selling, and servicing electric three-wheeler and four-wheeler vehicles. The company operates in over 30 cities across India and has shown consistent growth. For the financial year ending March 31, 2024, Euler reported a turnover of Rs. 172 crore, a significant increase from Rs. 49 crore in 2023 and Rs. 25 crore in 2022.​

Euler Motors recently expanded its portfolio by launching its first electric commercial four-wheeler, adding to its strong presence in the three-wheeler segment. This acquisition gives Hero MotoCorp a solid position in the rapidly growing market.

Hero MotoCorp Faced Challenges

Hero MotoCorp, while a leader in India's commuter motorcycle segment, has faced challenges in diversifying its portfolio. The company's efforts to expand beyond its core 100-150cc segment into scooters, electric vehicles, and premium motorcycles have had mixed results.

In the scooter market, Hero has struggled to compete with Honda's dominance, failing to regain the success it had during the Hero Honda partnership. Its models, Destini and Pleasure, have not performed as well as its competitors. For premium motorcycles, Hero MotoCorp has relied more on strategic partnerships than developing expertise in-house. The company invested in American manufacturer Erik Buell Racing (which later collapsed) and partnered with Harley-Davidson for the Indian market. These efforts highlight Hero's challenge in building premium motorcycle expertise on its own.

In the electric vehicle segment, Hero has adopted a multi-pronged approach by investing in other companies rather than focusing solely on in-house development. The company has made significant investments in Ather Energy, launched its own Vida sub-brand, and partnered with Zero Motorcycles for electric technology.

These joint ventures and strategic investments show that Hero MotoCorp acknowledges its limitations in quickly developing new competencies. While this approach reduces direct investment risks, it has led to slower diversification compared to rivals like Bajaj and TVS, who have more successfully expanded their portfolios beyond commuter motorcycles.

New Non-Profit Company

Hero MotoCorp's board has also approved the creation of a new non-profit company under Section 8 of the Companies Act, 2013, to drive its CSR initiatives. This entity, which is yet to be incorporated, will be fully funded by Hero MotoCorp through cash consideration. The company will provide the entire subscription amount. While details such as the name and operational scope are not yet revealed, the new entity will focus on social responsibility projects that align with Hero MotoCorp’s broader goals.

Once incorporated, the new entity will be classified as a related party to Hero MotoCorp. However, the company clarified that no promoter, promoter group, or group companies currently hold any interest in it beyond this relationship. The incorporation will happen once the required government and regulatory approvals are received, but no timeline or cost details are shared.

Also Read: Euler Motors Secures USD 20 Million in Debt Funding

CMV360 Says

Hero MotoCorp's investment in Euler Motors shows its interest in the electric vehicle market, especially electric three-wheelers. It’s a step toward exploring new opportunities, even as it competes in scooters and premium motorcycles.