Hero flags CAFE norms as emerging risk; EV lag behind TVS and Bajaj deepens pressure
Hero MotoCorp warns proposed CAFE fuel-efficiency norms (from April 2028) will raise costs in its price-sensitive core, where 5.4M of 6M FY26 sales sit in the 75-125cc range. It trails on EV share (3% vs TVS 8%, Bajaj 12%), and plans lightweight parts plus EV expansion to mitigate. Shares are down 16% in 2026.
What happened
Hero MotoCorp flags proposed CAFE fuel-efficiency norms for two-wheelers (from April 2028) as an emerging business risk, warning of higher costs in a
Key facts
- 5.4 million of 6 million FY26 sales in 75-125cc range
- Hero EV share 3%
- TVS EV share 8%
- Bajaj EV share 12%
- Vida market share up from 4% (4QFY25) to 11.1% (4QFY26)
- Hero shares down 16% in 2026
- CAFE norms from April 2028
Why this matters
The EV share gap versus TVS and Bajaj argues for acquisitions or partnerships in EV powertrain and lightweight materials to close the 2028 compliance runway.
What to watch
- Final CAFE norm text and confirmed April 2028 effective date
- Quarterly EV share trend vs TVS and Bajaj
- Hero gross margin trajectory in 75-125cc segment
- Vida volume and new model launch cadence
- Rural/entry-level demand elasticity to any price hikes
- Competitor pricing response and market share shifts
- Hero announces expanded Vida EV lineup and platform investment with capex guidance
- Lightweighting and supplier renegotiation program to offset CAFE compliance cost
- Possible selective price hikes on core 100-125cc models ahead of 2028
- Lobbying via SIAM for phased/relaxed CAFE implementation timeline
- Potential technology partnership or JV for EV/powertrain to accelerate catch-up