Hero Just Swiped Left On Zero’s Latest Funding Round. Here’s Why

Why buy the company when you can copy the homework?

Photo by: Zero Motorcycles

By: Enrico Punsalang

Jul 22, at 7:44am ET

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Judging solely from the headline above, it's clear to see that Hero MotoCorp has some pretty strong feelings about Zero Motorcycles. The Indian motorcycle giant slashed the carrying value of its investment in the California-based EV manufacturer from Rs 2.4 billion (about $29 million) to just Rs 190 million (about $2.3 million) for fiscal year 2026. That’s a 92 % markdown and a reported fair value loss of Rs 2.2 billion (about $26.7 million). Those aren’t exactly numbers you bury in the footnotes.

But if you stop reading there, you’re missing the bigger story.

Hero’s relationship with Zero actually goes back a few years. The company first invested in the American electric motorcycle maker in 2022 before the two formalized a technology partnership in 2023. It was a pretty sensible arrangement. Hero brought massive manufacturing scale and one of the biggest dealer networks on the planet. Zero brought nearly two decades of experience building electric motorcycles, batteries, powertrains, and software. Together, they were supposed to develop premium electric bikes under Hero’s VIDA brand, including concepts like the Project VxZ unveiled at EICMA.

Fast forward to today, and the partnership is still alive. The investment, however, has taken a very different route.

Hero Vida VxZ concept

Photo by: Hero MotoCorp

The markdown wasn’t triggered because Hero suddenly decided Zero had become worthless. It happened because Zero raised fresh capital, and Hero chose not to participate in the funding round. That decision diluted Hero’s ownership from 6.9% to just 0.8%, forcing the company to revalue its much smaller stake. Put simply, this wasn’t just an investment losing value. It was an investor deciding it didn’t need to keep buying a bigger slice of the pie.

That’s the part worth paying attention to.

When companies think a startup is absolutely critical to their future, they usually fight to maintain their ownership during fundraising rounds. Hero did the opposite. Instead of protecting its equity, it accepted the dilution. That suggests the company no longer believes owning a meaningful chunk of Zero is as important as having access to the technology it’s already helping develop.

And that’s a perfectly reasonable strategy. Hero doesn’t need to own 7% of Zero to benefit from its engineering expertise. If the collaboration continues as planned, Hero still gets access to years of electric motorcycle know-how without committing more cash to an increasingly expensive minority investment.

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It also helps that Hero has another EV bet that’s looking considerably healthier. The company owns around 30% of Ather Energy after investing roughly Rs 17 billion (about $205 million). That stake is now estimated to be worth more than Rs 130 billion (about $1.57 billion). Compared to that home run, Zero has become much less important as a financial asset.

So despite the scary-looking write-down, this announcement isn’t really about Hero giving up on electric motorcycles. It’s about Hero becoming more disciplined with where it wants its money working. The company appears perfectly happy owning less of Zero, as long as it can keep borrowing from the company’s engineering playbook. For riders in India, and eventually, the rest of the world, waiting on Hero’s next premium electric motorcycle, that’s probably the only part that actually matters.