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Hero MotoCorp launches much awaited EV offering under Vida brand!

ICICIdirect Research 10 Oct 2022 DISCLAIMER

What's Buzzing

 

Hero MotoCorp (HMCL) on October 7, 2022 launched its maiden captive offering in the electric vehicle space i.e. Vida V1 available in two variants i.e. Vida Vi Pro and Vida V1 Plus. Both variants have a top speed of 80 km/hr with certified range of 143-165 km and acceleration of 3.2-3.4s for 0-40 kmph. Vida V1 Plus (battery size: 3.44 kwh) is priced at Rs 1.45 lakh (ex-showroom) while Vida V1 Pro (battery size: 3.94 kwh) is priced at Rs 1.59 lakh (ex-showroom), both prices inclusive of centre driven FAME-2 subsidy while exclusive of state specific subsidies. 

Context

 

HMCL was the only 2-W OEM in the commuter segment without its EV offering with its EV presence largely limited to collaborative investments in other ventures including Ather Energy. Therefore, Vida V1 marks its maiden captive EV offering for the domestic as well as international markets. It also comes with a considerable delay of over six months. These vehicles have been tested for ~2 lakh km and are powered by Li-Ion battery - NMC Chemistry. These batteries are portable and can be charged at home. The company plans to launch it in three cities in phase 1 i.e. Bengaluru, Delhi and Jaipur with bookings set to commence from October 10 with deliveries set to commence in the second week of December. 

Our Perspective

 

HMCL's electric-2-W under Vida brand comes with many industry first offers like lower interest rate on loan by 1.5-2% than standard interest rate, assured buyback value of 70% if returned within 16-20 months, test ride period of three days among others. With this offering, HMCL is following a different strategy vs. its existing presence in the ICE domain with the present focus on top down approach by offering its product at premium pricing to its peers, with the intention to launch mass market products in due course of time. HMCL will sell Vida V1 through its website. It would be delivered at home with customers also having the option to visit the nearby dealership that would have special pods for EVs. HMCL also plans to set up experience centres pan-India at popular points like malls, etc. It also plans to open Vida exclusive dealerships in due course of time. HMCL, during the event, also informed about targeting >200 cc segment in the motorcycle space and becoming the largest OEM in terms of offering in coming years. It would also launch its electric motorcycle in coming years. The company also plans to monetise the data collected through the EV platform over the medium to long term. We believe HMCL is approaching the electric mobility space through organic as well as inorganic routes and is working on developing an EV ecosystem through its diversified investments in Ather & Gogoro along with partnerships with HPCL & BPCL for charging infra and would soon catch up with the emerging E-Mobility trend. However, over the long term, given the high penetration of 2-Ws domestically, we do not expect industry volumes to grow in double digits over a sustainable basis for a long period of time, thereby limiting valuation multiples being commanded by the commuter 2-W space. Key monitorable, going forward, at HMCL would be new product offerings in the EV space as well as the premium motorcycle segment.

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