The electric vehicle (EV) space has recently seen skyrocketing valuations and high-flying deals. But Royal Enfield, the world’s oldest motorcycle brand in continuous production, believes that monetising its upcoming EV business would be like selling the core of parent Eicher Motors and will resist from doing that.
Responding to a query from FE, Siddhartha Lal, managing director, Royal Enfield, said, “Hiving off the EV business, we have to think about what happens to the core business; does that become a sunset business just because you are putting all your future into something else and diluting yourself further? That is not our approach.”
Legacy players like Bajaj Auto and TVS Motor Company have hived off their EV division into separate entities, and have spoken about possibilities of getting external investors. Startup companies like Ola Electric, Ather Energy and Simple Energy, to name a few, have seen their promoters offload sizeable stakes to raise funds.
On Thursday, SUV-specialist Mahindra & Mahindra announced the sale of a nearly 3% stake in Mahindra Electric Automotive, an EV subsidiary, for Rs 1,200 crore to investment company Temasek, making it the second such instance of equity sale.
Tata Motors has sold between 11-15% stake to investors TPG and ADQ in Tata Passenger Electric Mobility, its subsidiary that houses the EV business, and raised Rs 7,500 crore.
“Of course, we look at all kinds of options, we look at what other people are doing and we try to understand. But we are also not a trend follower like this stack thing where everyone is getting in the money, doing these funny things. Frankly we do not understand it,” Lal said.
Royal Enfield, the market leader in the 250cc to 750cc segment with a share of 90%, plans to debut electric motorcycles in 2025. India’s electric two-wheeler market is dominated by the scooter body type with only a handful of companies producing electric motorcycles.
“As it stands today, the EV business is very much housed within EML (Eicher Motors) and there is no endeavour to change that at all. It is a future growth engine for EML over the next decades. It is very much core, core, core as I think of it for EML and RE (Royal Enfield). Unless something totally changes, it will certainly be within our hold and portfolio,” Lal added.
Royal Enfield has put in place around 100 people dedicated to its EV business. The brand is testing mules, signing up supply partners and setting up manufacturing capabilities for the business. it has planned initial annual capacity of 150,000 units, which could be scaled up, said company officials.
“We have made enormous progress internally on the EV plans. We have a strong and capable team on the engineering side and also on the commercial side where we focus on not just building a distinct Royal Enfield motorcycle, but a comprehensive and thoughtful electric mobility business,” Lal added.
