According to an Economic Times story, Altigreen Propulsion Labs, a Bengaluru-based firm that specializes in electric three-wheelers (E3Ws), is in advanced talks to receive a sizable strategic investment from leading two-wheeler brand Hero MotoCorp (HMC).
This deal could place the Pawan Munjal-led company in direct rivalry with Mahindra & Mahindra (M&M) and Bajaj Auto as it enters the quickly growing and fragmented industry. The article, which cited insiders, stated that Hero is anticipated to pay up to Rs 900 crore for a share in the 11-year-old company.
Hero-Altigreen agreement: mutually beneficial
If the purchase goes through, Altigreen will get a significant investor who can support it in growing quickly and entering important markets. Hero MotoCorp would be diversifying into the E3W area with this investment, which is dominated by M&M and where competitor Bajaj Auto has already made a name for itself. Amitabh Saran, the co-founder of Altigreen, and Hero MotoCorp have not yet responded to inquiries about the possible purchase.
This would be Hero’s second major investment in an EV company, provided the deal goes through. With a June investment of Rs 124 crore for an additional 2.2% interest, the business now owns 40% of electric two-wheeler manufacturer Ather Energy. At the time of this funding round, HMC had invested Rs 140 crore in December of the previous year, for a total valuation of Rs 5,636 crore, up from Rs 4,666 crore.
Self-described as a technological company, Altigreen sold 2,800 units and recorded a turnover of Rs 115 crore for the fiscal year 2024. Hero and the corporation have been in talks for almost six or nine months. Between seed and Series A investments, it has raised $56 million (about Rs 470 crore) to date; nevertheless, the valuation is still unknown. Leading Series A was led by Xponentia and Sixth Sense, with participation from Momentum (Singapore), Accurant (US), and Reliance Industries.
Altigreen is introducing new models.
As per the article, which cited sources, Altigreen plans to utilize the funds for launching new models, expanding its reach, and achieving profitability.
The company’s electric freight three-wheelers are made to carry items including gas cylinders, vegetables, dairy, and poultry, as well as to fulfill the last-mile delivery requirements of online retailers. Since 2021, when it first entered the market, Altigreen has sold about 5,000 cars. On the other hand, Bajaj Auto sells 3,500 units monthly, while M&M sells 7,000.
By the end of the year, Altigreen hopes to have 40 dealers operating in its network, up from about 30 at the moment. On its website, the company states that it can build 55,000 cars a year.
Sales of three-wheelers in FY24
The Federation of Automobile Dealers’ Associations reports that in FY24, sales of internal combustion engine (ICE) cargo three-wheelers reached 121,506 units, while sales of auto-rickshaws totaled 511,754, indicating rises of 33.64 percent and 61.5 percent, respectively.
By 2030, it is anticipated that 50% of electric autorickshaws will be powered by electric vehicles, up from 11% in FY24. According to M&M’s investor presentation for the June quarter, the penetration in the cargo three-wheeler market is predicted to increase even more quickly, from 14% in FY24 to 55% in FY30.
