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December 03, 2008


Hero Group cancels JV plan with UK\'s Ultra Motor

ET reported that the proposed JV between Hero Group and UK’s electric vehicle firm Ultra Motor for electric 2 wheelers is off as the two have decided to part ways within a year of launching co branded scooters and bikes in India. While the existing technical collaboration cum joint marketing deal has been disbanded, the proposed 50:50 JV announced in October 2007 has also been scrapped.

Under the terms of the deal, Ultra was to provide electric vehicle motors for the two wheelers while Hero Cycles, was to assemble the vehicles at its Ludhiana unit. Ultra has also set up an exclusive distribution network of 150 dealers across India.

Mr Joe Santana chairman of Ultra Motor said that "Our vision did not match with that of the Hero Group. We wanted to expand at a much faster pace. The congestion in cities creates a natural market for electric two wheelers. Now, we have our own plan which is to invest INR 150 crore over the next 3 years."

Mr Vijay Munjal MD of Hero Cycles said that "We have terminated our technical agreement with Ultra Motors. The proposed JV also stands cancelled. We have our own range of low speed electric vehicles in the market under the Hero Electric brand. We have a strong R&D base and will soon foray into the high speed electric vehicle segment."

The duo had started with a technical collaboration cum joint marketing deal for light electric vehicles, signed in late 2006. It was a precursor to a formal JV with plans of a new manufacturing facility. One of the prominent players in the nascent EV market in India, the duo had exceeded targets and clocked sales of 22,000 units in FY’08 capturing 20% market share.

Pursuant to this break up, Ultra is going to launch Ultra Motor branded electric two wheelers independently. It will bring in motors from a production unit that it acquired in Taiwan in 2007, to be assembled through a Hyderabad based partner in India. Hero Cycles is expected to bring in electric vehicle kits from China or Taiwan and assemble them under its own brand.