Hero MotoCorp plans to invest ₹900 crore in electric three-wheeler firm Altigreen Propulsion Labs, aiming to compete in the growing market with Mahindra & Mahindra and Bajaj Auto. A deal announcement is expected shortly following completed due diligence.
Hero MotoCorp, the dominant player in the two-wheeler market, is nearing a significant strategic investment in Altigreen Propulsion Labs, a startup from Bengaluru that specializes in electric three-wheelers (E3Ws). This move is seen as an opportunity for the Pawan Munjal-led company to make its mark in a competitive and rapidly expanding market, potentially positioning it in direct competition with industry giants like Mahindra & Mahindra and Bajaj Auto.
Sources familiar with the matter suggest that Hero is prepared to invest as much as ₹900 crore to acquire a share in Altigreen, which has been in operation for 11 years. The due diligence process for this investment has reportedly been completed.
Should this investment proceed, Altigreen stands to gain a substantial backer and is poised to assist in its rapid expansion and deeper market penetration. For Hero MotoCorp, this would mark a strategic diversification into the burgeoning e-three-wheeler segment, where Bajaj Auto already has an established presence and is led by M&M. Despite inquiries, Hero MotoCorp did not respond to requests for comment, and Altigreen’s co-founder Amitabh Saran was unavailable.
This potential deal would be Hero’s second major investment in an electric vehicle (EV) manufacturer, following a significant stake in Ather Energy, an electric two-wheeler company preparing for an IPO. Hero recently increased its stake in Ather Energy to 38.2% with an investment of Rs 124 crore, reflecting a valuation increase.
Industry analysts have noted that with competitors such as Bajaj Auto and TVS Motor already active in the three-wheeler market, it is logical for Hero MotoCorp to explore entry through electrification. Altigreen, branding itself as a technology firm, reported a turnover of ₹115 crore and sales of 2,800 units in FY24. The company has been engaging with Hero for six to nine months and has raised substantial funding through early investment rounds.
An insider mentioned that negotiations are progressing swiftly towards finalizing the deal, which would enable Altigreen to introduce new models, expand its market presence, and achieve profitability targets. The forthcoming investment is expected to catalyze Altigreen’s next growth phase.
Altigreen’s electric cargo three-wheelers target last-mile delivery needs for various sectors including ecommerce, and are also used for transporting everyday goods like vegetables, dairy products, and gas cylinders. Since its market entry, Altigreen has sold approximately 5,000 vehicles. In contrast, monthly sales figures show M&M selling 7,000 units and Bajaj Auto 3,500 units.
Furthermore, Altigreen is developing an electric cargo four-wheeler suited for regional delivery routes. The company aims to expand its dealer network from 30 to 40 by year-end and has the capacity to produce 55,000 vehicles annually.
The shift to electric three-wheelers is supported by their lower total cost of ownership and government incentives, making electrification more appealing than for other vehicle types like two-wheelers, buses, and cars. This trend is underscored by significant sales growth in both ICE cargo three-wheelers and auto rickshaws during FY24, with a notable increase in EV penetration in this segment anticipated to continue rising sharply through 2030.
