Hero MotoCorp plans to expand its VIDA electric two-wheeler manufacturing capacity to more than 80,000 units a month by the second quarter of FY28, from 30,000 units in September 2026, as strong demand for electric scooters drives further investment. The company has also nearly doubled its petrol scooter production capacity to around 80,000 units a month.
The country's largest two-wheeler maker is expanding production across both powertrains as it seeks to increase its presence in India's growing scooter market, where demand has outpaced available supplies.
Speaking during the company's Q2 FY27 analyst call on Thursday, Chief Executive Officer Harshavardhan Chitale said VIDA's monthly manufacturing capacity had doubled from 15,000 units at the end of FY26 to 30,000 units in September. The company expects to increase this to 45,000 units by Q4 FY27 before undertaking another round of expansion.
"We have already started further expansion as well, which will take our capacity to over 80,000 units a month by quarter two of next financial year," Chitale said.
The expansion comes as demand for VIDA electric scooters continues to exceed production. Chitale said the company was operating with dealer inventory of approximately one day, indicating that supply remained constrained despite the recent capacity increase.
"Right now the industry as a whole is definitely capacity constrained. There is far more demand," he said, adding that manufacturers were working with suppliers to increase production.
According to management, VIDA's electric two-wheeler market share had increased to approximately 13.5-14% during October, supported by additional capacity coming online.
VIDA Distribution and Premium Variants
Hero is also looking to expand VIDA's retail presence as production capacity increases.
Chitale said the company currently retails VIDA electric scooters through approximately 700 outlets, although only around 450 receive adequate supplies regularly. This compares with Hero MotoCorp's broader network of approximately 8,500 points of sale.
As production increases, the company expects more outlets to begin selling its electric scooters, allowing it to reach customers in additional markets.
"Now, as we start scaling up our capacity in VIDA, you will see more and more of these outlets also getting opened up," Chitale said.
The company is also seeing stronger demand for premium electric scooters. During the ongoing financial year, it introduced the VIDA VX2 Go with a 3.1 kWh battery and the VX2 Plus with a 4.4 kWh battery, broadening its portfolio across price points and customer requirements.
Kaushalya Nandkumar, Chief Business Officer of Hero MotoCorp's Emerging Mobility Business Unit, said premium variants were approaching 40% of VIDA's overall portfolio mix, although it was still early to determine whether that proportion would be sustained.
Management said the higher-end 4.4 kWh variant had received a particularly strong response. The company is also expanding revenue from software subscriptions, including VIDA Edge, along with accessories and other non-vehicle services.
VIDA Turns Gross-Margin Positive
The capacity expansion comes as VIDA's financial performance begins to improve. The electric vehicle business turned gross-margin positive during Q2 FY27, ahead of management's earlier expectations, supported by higher volumes, improved product economics, cost reductions and production-linked incentives.
"I am happy to report that our Vida business turned gross margin positive in the quarter," Chief Financial Officer Vivek Anand said.
However, VIDA remains loss-making at the EBITDA level. Anand said the electric vehicle business recorded an EBITDA drag of Rs 168 crore during the September quarter, compared with Rs 232 crore in Q1 FY27, an improvement of Rs 64 crore.
The EV business generated approximately Rs 1,000 crore in revenue during Q2, while the company recognised Rs 63 crore in PLI incentives.
Management attributed the improvement to lower material costs, better margins on new products, selective price increases and higher contributions from software and other non-vehicle revenue.
Hero said it had received PLI certification for nearly its entire VIDA portfolio in October, which could support further improvement in the business's unit economics as volumes increase.
Chitale acknowledged that VIDA still had some distance to cover before reaching EBITDA profitability, as Hero continues to invest in product development, branding and distribution.
Petrol Scooter Capacity Nearly Doubles
Hero is simultaneously expanding its conventional scooter business, where demand has strengthened across the Destini and Xoom ranges.
The company increased Destini production capacity during Q1 FY27 and followed it with additional Xoom capacity in Q2. Together, the expansions have nearly doubled its petrol scooter manufacturing capacity year-on-year to around 80,000 units a month.
Chitale said both products had performed in line with the company's expectations, with the Xoom 160 receiving a particularly strong response.
Hero plans further capacity additions for the Xoom range as demand increases in domestic and overseas markets. Hero MotoCorp's domestic petrol scooter dispatches increased around 35% year-on-year to 1.53 lakh units during Q2 FY27, from 1.13 lakh units a year earlier, according to its investor presentation. During the first half, domestic petrol scooter dispatches rose 53% to approximately 2.75 lakh units.
Ashutosh Verma, Chief Business Officer of the India Business Unit, said Hero had gained approximately 160 basis points of market share in the petrol scooter segment during the financial year to date.
Indian Electric Two-Wheeler Makers Expand Capacity
Hero's expansion comes amid a broader manufacturing push by Indian electric two-wheeler makers as demand rises and production constraints limit sales.
Bajaj Auto recently announced plans to increase Chetak electric scooter production to around 80,000 units a month by Q4 FY27 from just over 62,000 units. The company is also evaluating locations for a sixth manufacturing plant to support future growth.
Similarly, TVS Motor plans to expand its electric two-wheeler capacity to around 80,000 units per month from its current operating level of 60,000-65,000 units, including domestic and export requirements.
Ather Energy has also announced an investment of approximately Rs 122 crore to add 2.25 lakh units of annual production capacity across its Hosur and Chhatrapati Sambhajinagar facilities. The expansion will take its combined installed capacity to approximately 11.4 lakh units annually by Q2 FY28.
The investments follow a sharp increase in electric two-wheeler adoption. According to FADA data, electric two-wheeler registrations increased nearly 89% year-on-year to 2.07 lakh units in September 2026, with electric models accounting for 11.6% of overall two-wheeler retail sales, compared with 8.2% a year earlier.
For Hero MotoCorp, the expansion is part of a broader strategy to increase market share in fast-growing vehicle categories while improving profitability. In the September quarter, the company's standalone revenue increased 21% year-on-year to Rs 14,687 crore, while net profit rose 5% to Rs 1,456 crore. EBITDA increased 8% to Rs 1,968 crore, although margins remained under pressure from higher commodity costs.
Hero has maintained its FY27 capital expenditure guidance of approximately Rs 1,500 crore, with nearly Rs 600 crore deployed during the first half. Management said it would continue investing in capacity expansion, new products and distribution while working towards its medium-term EBITDA margin target of 14-16%.