Hero MotoCorp may face structural pressure as a rapid surge in unregistered, low-speed electric two-wheelers reshapes India’s entry-level mobility landscape, according to a sector note by Elara Capital.
The brokerage highlighted that the prolonged weakness in the economy motorcycle sector is far from a standard cyclical downturn, cautioning that “entry-level demand is being reset and entry level motorcycles could be under structural strain and not cyclical slowdown”.
Unregistered low-speed electric two-wheelers have quietly outpaced conventional high-speed electric scooters. Industry data compiled by Elara Capital reveals that low-speed electric volumes soared from 1.24 lakh units in FY23 to 18.68 lakh units in FY26, registering an eye-catching compound annual growth rate of 147 per cent.
The segment’s share of overall electric two-wheeler sales surged from 14 per cent to 56 per cent over the same period, overtaking registered high-speed alternatives, whose market share contracted from 86 per cent to 44 per cent.
When accounting for low-speed models, India’s electric two-wheeler penetration reached 13.9 per cent in FY26, more than double the reported 6.6 per cent. Concurrently, total two-wheeler volumes for FY26 expanded to roughly 2.40 crore units, up from the officially reported 2.21 crore units.
Elara highlighted that this explosive momentum is fueled by widespread adoption among gig workers, complete exemption from vehicle registration and insurance, and accessible retail prices between ₹30,000 and ₹50,000.
This migration directly affects Hero MotoCorp, given its dependence on entry-level motorcycles.
Domestic economy motorcycle volumes remained virtually flat at 19.24 lakh units in FY26, inching up by a modest 0.5 per cent year-on-year. Rather than demand vanishing, Elara noted that consumers are switching formats.
Assuming low-speed electric scooters substitute for nearly half of economy motorcycle buyers, the combined affordable-mobility pool actually grew 24.2 per cent year-on-year in FY26.
The brokerage stressed that this “shifts the debate from a cyclical demand recovery to a structural volume-migration risk for Hero’s entry-level franchise”.
“Monitor Hero’s entry-level mix trajectory, rural adoption rates of low-speed EVs, and whether Hero participates in the affordable electric-mobility pool it is currently ceding to unregistered/unbranded players,” Elara said.
“We believe this surge in low speed e-2W volumes would have eaten into entry-level motorcycle segment too, mainly impacting Hero MotoCorp’s entry level volumes and market share,” the brokerage added.
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