Hero Moto and BPCL collaborate for charging infrastructure

Hero, BPCL charging alliance

Indian Market
by 5paisa Research Team Last Updated: 2022-08-08T19:02:05+05:30

India’s largest two-wheeler manufacturer, Hero Motocorp, and BPCL have entered into a futuristic tie-up to leverage the emerging energy order in the transport industry. Both the companies will join hands to set up charging infrastructure for 2-wheeler electric vehicles. BPCL has already been targeting the conversion of 7,000 conventional retail outlets into energy stations that actually provide multiple fuelling options, including EV charging facility.

One of the biggest challenges to the electrical vehicles (EV) growth is the availability of adequate infrastructure. For the EVs to take off in a big way, the EV charging stations and battery replacement points have to be abundant and widespread like in the case of the fuel stations dispensing petrol and diesel today. Unless that level of infrastructure is in place, the growth of EV beyond a point will be tough. That is why this collaboration is significant.

While Hero Moto has the strongest two-wheeler franchise in India, BPCL is a leader in oil refining and oil marketing with an extremely profitable business model. Now Hero Moto and BPCL will ally to first establish a substantial charging infrastructure at the existing nationwide energy station network. The advantage of the tie-up is that customers of Hero Moto can now leverage the existing nationwide fuelling infrastructure of BPCL.

Charging is just one part of the entire collaboration. Over time, customers will require charging, exchanging batteries, other forms of wear and tear service etc. Therefore, the eventual idea of this collaboration is to gradually expand and broaden this relationship to develop more synergies within the EV ecosystem as well as  lateral business verticals. This will enable a better ownership of the customer and stickiness through the life cycle.

In terms of the rollout, in the first phase, the charging stations will be set up in 9 key cities starting with Delhi and Bengaluru. Once the waters are tested, the network of collaboration will be expanded across India with the idea of establishing a high density of charging stations to make the EV charging infrastructure truly robust. This is likely to be value accretive for Hero Moto, for BPCL and also for the end customers and station franchisees.

Both Hero Moto and BPCL plan to start small to test the markets but are keen to scale up the relationship rapidly so as to provide the complete gamut of customer energy solutions under a single roof. Both the companies believe that a proper investment in the right infrastructure for charging stations will be the proper way to use and allocate capital, ensuring high levels of return on capital for both the partners in the project.

The enthusiasm is not hard to fathom. As the BPCL chairman admitted, personal mobility for the average Indian is still primarily driven by two-wheelers rather than four-wheelers. These two-wheelers still form the largest part of the auto customer base in terms of numbers. Also, the transition to EVs is expected to be a lot simpler in the case of two wheelers than for four-wheelers. Both companies seen an exciting future of innovative EV solutions.

While the complete plans is yet to be rolled out, the basic building blocks are in place. Hero Moto will shortly commence infrastructure development in Delhi and Bengaluru. To begin with, each charging station will feature multiple charging points, including DC and AC chargers, made available for use to all two-wheeled EVs. The charging experience will be controlled by the Hero Moto mobile application through a cashless transaction model.

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