India has always been a home to the world’s largest number of two-wheeler buyers since long. However, the wind has changed its direction in the present era with the introduction of electric 2-wheeler. Electric 2-wheeler has seen a massive growth in recent times. Compared to April 2021, Electric 2-wheeler market witness growth of 858% in April 2022. This data clearly indicates that electric vehicle revolution has landed in India. The Electric 2-wheeler market has emerged as the undisputed leader both in terms of sales number as well as growth. In fact, Electric 2-Wheeler market has biggest growth percentage of 461% in FY22 as compared to Electric cars i.e., 251% and E-rickshaw i.e., 98%. As per a recent study, electric vehicles (EVs) market’s worth will be around Rs.475 billion by 2025. It’s clearly demonstrated that our 2-wheeler market is moving towards a new phase of growth, innovation and investment.
With exponential increase of 20% over the past year in petrol prices, the shift to electric 2-wheeler by the consumer was pretty evident. The government is also seeking to accelerate the growing demand of electric vehicles. The government has increased the incentive subsidies linked to the battery capacity for e-2W from US$ 133.04/KWh to US$ 199.56/KWh. GST on electric vehicles and charging station has also been reduced from 12% to 5% and from 18% to 5% respectively. Central government (MoRTH) had advised other states to waive road tax on EV, which will lead to reduction in the initial costs of EVs.
However, the future of Electric 2-wheeler market still has many challenges and obstacle. While the government aims for at least 65% of all new vehicle sales to be electric by 2030, our infrastructure are still inadequate to meet their motive. Our country doesn’t have adequate charging infrastructure which creates a roadblock to EVs market expansion. There are approx. eight lakhs electric 2-wheeler on the road today and we have roughly 2000 public charging vehicles. This poor density of charging stations limited the ease of using electric vehicles.
The major factor in EVs market is their capital cost which makes 60% of consumers believe that an EV is beyond their budget. On an average, each electric 2-wheeler are sold at a 20-25% premium as compared to Internal Combustion (IC) vehicles. Adding on this high upfront cost, resale value of EVs are low as compared to petrol driven vehicle.
Our over dependency on imports to meet the market demand is another concern for electric 2-wheeler segment as we still lack the manufacturing base for batteries in India. As per recent data, India imports more than $1 billion worth of lithium-ion cells in 2021 as India doesn’t have any known reserves of lithium and cobalt which are required for battery production. However, government has initiated Go Electric Campaign aiming to reduce the import dependence of our country in the coming years and has also been projected as an important step towards a cleaner and greener future.
The biggest concerns for electric 2-wheeler have been the safety and quality of batteries used in these electric two-wheelers. Lately, social media is flooded with videos of battery-powered scooters in flames. In march 2022 an incident occurs where a father and daughter died from smoke inhalation after their brand-new bike from Okinawa Autotech Pvt caught fire while it was charging overnight at home. Another incident occurs where an Ola Electric Mobility Pvt scooter burns in Pune, while in another, some 40 two-wheelers made by Jitendra EV go up in smoke as they were getting transported in a container. In another accident, a user claimed that his Ola S1 Pro’s front suspension broke down while riding. What’s even more shocking is that many other users too joined him with countless stories of quality issues, breakdowns and poor after-sales experiences on the same thread.
All these incidents evidently define one thing that automakers in electric 2-wheeler market are not designing their products from the ground up for our nation’s extreme hot climate or its infrastructure. Currently in our Indian market, most of the EV components are imported from China which prevent the automakers from full authority over quality and reliability of their products. Nevertheless, government introduced ‘Make in India’ campaign to encourage manufacturers to produce components locally and build a structured policy framework as India is heavily dependent on China for lithium supply chains constraining the widespread deployment of EVs. Without local manufacturing electric 2-wheeler market will have tough road ahead, with increase in dollar prices due to rising tensions.
Electric 2-wheeler market may have many obstruct in its way but its significant growth in recent years has kept the market inspired to keep doing better everyday. Electric 2-wheeler market should look forward to enhance the grid and accommodate higher renewable energy penetration while maintaining secure and stable grid operation.
After covid era, there has been a huge demand among the consumers in the field of mobile phones, laptops, power banks etc which require advanced chemistry batteries. This means it’s a massive economic opportunity in manufacturing of advanced batteries that will not only help electric 2-wheeler market but other markets as well. Beside local manufacturing, government should plan on building EV charging Infrastructure. It can be set up at various public utilities such as petrol pump or CNG pump and in the parking facilities of commercial ventures like malls, railway station etc.
Electric 2-wheeler can anticipate Mobility as a Service (MaaS), where consumers who don’t own the vehicle can access their services whenever the need arises. Since the upfront cost of an EV is higher than an IC vehicle, providing such services becomes crucial to large scale adoption. Entrepreneurs should look to innovate in these sectors and provide solutions to onboard a higher number of Indians into the EV revolution.
Electric 2-wheeler still poses massive growth in the coming decade with a strong infrastructure that is cost effective, convenient and assists all consumer groups combined with stable financing ecosystem and technological advancements. There are still many questions over infrastructure and manufacturing however the future of electric 2-wheeler in India is full of promise.