Tipping point for electric two-wheelers

The rising price of petrol and the falling cost of batteries have created a big opportunity for electric two-wheelers in the Indian market. With running costs as low as Rs 9 ($0.12) per 100 kilometers*, upfront costs converging with those of the conventional liquid fuel variants and various models launched, and launching, the outlook for the sector is quite bullish. As is well known, over 80 per cent of India’s automobile market is made up of two-wheelers, with the rest being cars, trucks and three-wheelers. Electrification of this large market segment seems imminent, with sales li.....
The rising price of petrol and the falling cost of batteries have created a big opportunity for electric two-wheelers in the Indian market. With running costs as low as Rs 9 ($0.12) per 100 kilometers*, upfront costs converging with those of the conventional liquid fuel variants and various models launched, and launching, the outlook for the sector is quite bullish.

As is well known, over 80 per cent of India’s automobile market is made up of two-wheelers, with the rest being cars, trucks and three-wheelers. Electrification of this large market segment seems imminent, with sales likely rising from thousands of units every year to millions very soon.

“I think in the next two to three years, there’s a very good chance overall, in the two-wheeler market, almost 10 per cent sales could go electric,” Ather Energy’s CEO and co-founder Tarun Mehta said last week. India’s automobile sales totalled 19 million units last year, with two-wheeler sales at over 15 million.  

 
Globally, China was the largest market for electric two-wheelers in 2020, followed by Vietnam and India. 

India is seen becoming the largest market for two-wheelers in the next few years, though China remains the largest market for electric two-wheelers all the way to 2040, according to BloombergNEF’s Economic Transition Scenario, which models growth based on techno-economic trends and market forces. Three out of every four two-wheelers sold in India could be electric by 2040, according to the BNEF scenario.

The swing to electric mobility would mean a significant reduction in liquid fuel sales. These would trigger other fundamental changes, as taxes on fuel are a significant source of revenue for the state. 

The three main factors driving growth in India’s electric two-wheeler market are:

1. Models galore

The biggest two-wheeler companies are now getting into electric models. Bajaj Auto, one of the world’s largest two-wheeler manufacturers, announced that it was setting up a wholly-owned subsidiary for manufacturing of electric and hybrid electric vehicles — two-wheelers, three-wheelers and light four-wheelers. Hero MotoCorp plans to launch its first electric scooter before March 2022, Chief Executive Officer Pawan Munjal said at the BloombergNEF Delhi Summit in June. TVS Motor plans to expand its electric portfolio. Ola’s electric two-wheelers are currently available for booking. They join a host of companies already selling in the market, such as Hero Electric, Okinawa Autotech, Ather Energy and Revolt Motors. 

2. Easy charge or swap

Under the government’s FAME incentive scheme, about 430 electric vehicle charging stations have been installed across India, and about 2,900 have been sanctioned, the Minister of State for Heavy Industries Krishan Pal Gurjar told Parliament last week. A few charging stations have been installed without recourse to incentives. It is not clear how many of these can be used by two-wheelers with smaller batteries, but the smaller vehicles do have an edge over cars: They can be charged using a regular home socket. A public charging network is an advantage for sure, but not a pre-condition for higher penetration of electric two-wheelers. Since their battery is smaller and lighter, it could also simply be carried home for charging. “There is no special infrastructure required. It is as easy as charging your mobile phone,” Jeetender Sharma, founder and managing director of Okinawa Autotech, told BNEF earlier this year. 

There is also the option of swapping a depleted battery with a fully charged one at a swapping station. India is likely to see more of these stations, with Hero MotoCorp partnering with Taiwan’s Gogoro to set up a battery-swapping joint venture.

3. Corporate demand

Companies delivering food or other products are going electric because it is economical to do so, and because it helps meet sustainability targets. Walmart backed Flipkart announced its plan to deploy 25,000 electric vehicles by 2025 earlier this year. This includes two-, three- and four-wheelers. Zomato has committed to 100 per cent adoption of electric vehicles by 2030. In a blogpost on its website in June, founder and Chief Executive Officer Deepinder Goyal said: “We understand that getting to 100 per cent adoption of EVs will not be easy, but is essential in the long run. At the moment, the adoption rate is very low for us and for the two-wheeler industry in general … However, given the rapid innovation in this field and positive push by the government, we expect a much faster transition to EVs for the two-wheeler industry over time. We want to actively aid the transition.” Swiggy, BigBasket and Domino’s Pizza are all adding to their electric fleet.  Electric two-wheelers have also been the choice for bike-sharing companies like Yulu.
/> *According to  a statement from RattanIndia on July 22, announcing the purchase of Revolt’s electric bikes for Jubilant Foodworks. The writer  is  editor – global policy for BloombergNEF.  vgombar@bloomberg.net



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