Pune’s electric motorcycle startup has approached two-wheeler firms like Kinetic Green, Hero MotoCorp, and TVS for a buyout.
Tork Motors, an electric motorcycle startup based in Pune and supported by notable investors like Ratan Tata, Bharat Forge, and Ola’s Bhavish Aggarwal, is actively seeking to divest a portion of its equity to raise funds. This strategic move aims to rejuvenate its operations, which have been severely impacted by the recent reduction in government subsidies for electric vehicle sales and a broader constriction of funding.
The company has approached several prominent two-wheeler manufacturers, such as Kinetic Green, Hero MotoCorp, and TVS Motor Company, with proposals for a potential sale of its stakes. These companies are currently evaluating the proposals and are expected to make decisions soon. However, the exact percentage of the stake Tork Motors intends to sell remains undisclosed. According to recent evaluations by The Kredible and Entrackr, Tork Motors is valued at $45 million.
Experts in the industry point to the scaling back of subsidies under the FAME (Faster Adoption and Manufacturing of Electric Vehicles) scheme and a scarcity of venture capital and private equity investments as significant hurdles for Tork Motors and other electric two-wheeler manufacturers. The FAME scheme’s second edition saw a substantial reduction in the subsidy rate in June 2023, which led to a notable increase in the prices of electric two-wheelers and a dramatic decline in their sales.
While Kinetic Green has expressed interest in expanding its electric two-wheeler segment and is exploring investment opportunities, it has yet to make a final decision regarding an investment in Tork Motors. Responses from other key stakeholders, such as Hero MotoCorp, Ola, TVS Motor, and Bharat Forge, as well as Tork Motors CEO Kapil Shelke, were not available at the time of inquiry.
The recent changes to the FAME scheme have resulted in a 21% price surge for electric two-wheelers, which precipitated a 55% drop in sales as of June 2023. However, sales have shown signs of recovery in 2024 due to adjusted pricing strategies and decreasing battery costs. Despite a muted investment climate in the electric vehicle OEM sector over the past year, there is an anticipation of increased strategic acquisitions, as noted by Vasudha Madhavan, founder of Ostara Advisors.
Earlier this year, Tork Motors managed to secure $6 million in new capital from Maxis Capital, although a significant funding deal of ’50 crore was abruptly called off. This lack of additional funding has hindered the company’s ability to expand its product line and maintain robust sales. Currently, the company’s sole product is the Kratos R electric motorcycle.
Operational challenges have led Tork Motors to halt dealer dispatches since December and close its manufacturing facility in Chakan, near Pune. The company has also been forced to cancel numerous customer bookings. Furthermore, Bharat Forge has written off its investment in Tork Motors, as disclosed by Amit Kalyani, the vice chairman & joint managing director, following the firm’s first-quarter results.
