Electric Two-wheeler industry – India
The electric 2-wheeler industry is in the nascent stage in India.
Categorization of Electric two-wheeler (e2w) industry in India
The electric two-wheeler industry can be categorized into:
- Less than 25km/hr – low-speed battery operated vehicles
- More than 25km/hr – high-speed battery operated vehicles
The low-speed electric vehicle (less than 25km/hr) does not require registration and license whereas the high-speed electric two-wheeler (more than 25km/hr) requires registration and license to drive.
Low speed electric two-wheeler
The Society of Manufacturers of Electric Vehicles (SMEV), a registered association representing Indian manufacturers of electric vehicles (EV) estimates the low-speed e2w for FY 20-21 at 1,03,000.
The low-speed e2w has declined by 19%.
High speed electric two-wheeler
As the Ministry of Road Transport & Highways data, the registration for high-speed e2w stands at 41,013. This is a substantial jump (+65%) over last year.
This data includes registration for Non-Transport (NT), Transport (T) and Invalid Carriage
The electric two-wheeler has reached 1,44,013 in FY 20-21.
Trends in high-speed electric two-wheeler in India
The trends in high-speed electric two-wheeler are:
- In the last 5 years, there has been a spike in e2w registrations in FY18-19 and FY20-21.
- Significant growth in the registration of high-speed e2w from 25,839 in FY19-20 to 41,013 in FY20-21.
- Hero Electric (36%) and OKINAWA (17 %) lead the e2w market in FY20-21.
- In FY19-20, the combined share of Hero Electric and Okinawa was ~71%. This has declined to ~53% in FY20-21.
- The major gainers in FY20-21 are:
- The new entrant Pur Energy Pvt Ltd. has gained 5% of the market in FY20-21.
- The major gainers in FY20-21 are TVS Motor, Bajaj Auto, Being Energy, and Jitendra New Ev-Tech.
Key Drivers for growth of electric two-wheelers in India
1. Government Policy initiatives towards electric vehicles
In order to promote the manufacturing of electric vehicle technology and to ensure sustainable growth of the same, the Department of Heavy Industry implemented the FAME-India Scheme Phase-I [Faster Adoption and Manufacturing of Electric Vehicles in India] and FAME 2 scheme.
The salient features of Phase-II of the FAME 2 Scheme are to give a push to electric vehicles (EVs) in public transport and seeks to encourage adoption of EV’s by way of market creation and demand aggregation.
ØChina dominates the Lithium-ion battery market (80 percent of the chemicals, 66 percent of the cathode and anode, and 73 percent of the cells are produced in China).
The Govt. of India has realized the potential of high scale cell manufacturing as of strategic importance to the country and launched the Advanced Chemistry Cell program with a Production Linked Incentive Scheme of INR 18,100 crores.
3. Spiraling petrol prices
Petrol 2w has witnessed a major decline in FY20-21 due to COVID and an increase in petrol prices.
Petrol prices were at INR 75 per litre during Mar’20 has is ~ INR 97.5 per litre in Mar’ 21 ie. The cost of petrol has increased almost 31%.
The increasing petrol prices are making the e2w a more viable option
The registration of petrol 2-wheeler vehicles has witnessed a decline in the last 2 years: -32% in FY20-21 and -3% in FyY19-20.
Bajaj and TVS petrol vehicles have witnessed a decline in line to category. These companies have launched their e2w and are have grown in FY20-21.
3. Decline in Lithium ion cell price which a major cost for Battery operated vehicles.
Key Barriers for electric two-wheelers in India
1. Tax and duty structure
- Electric vehicles are taxed at 5 percent GST.
- However, the procured raw materials for electric vehicles fall in the bracket of 18-28 percent GST, which impacts the price
- Ministry of Road Transport and Highways (MoRTH) has allowed sales of vehicles without batteries as well, as Battery as a service is recognized as a business model. The electric vehicles sold without batteries are taxed at 28 percent GST. Even for electric vehicles, batteries sold separately are also taxed at a GST rate of 28 percent.
2. Charging infrastructure
The charging infrastructure sector in India is still yet to develop.
Investment in public charging infrastructure is essential to reducing charging and increase the public acceptance of mass adoption of electric vehicles
3. Resale market for electric vehicles
The resale market for electric two-wheelers is still nascent.
Due to which the resale price is less than desired.
Summary
The key aspects of the electric two-wheeler market in India are:
- The high-speed electric two-wheeler is expected the drive the e2w market
- The electric two-wheeler industry which was dominated by a few players in the last few years is now witnessing increased competition.
- The petrol two-wheeler majors like Bajaj Auto, TVS Motor, etc have witnessed substantial growth in FY20-21. With their established network across the country, it is expected to grow further.
- Ola Electric Mobility is setting up the world’s largest two-wheeler plant in India. Ola Electric hopes to make 10 million vehicles annually or 15 percent of the world’s e-scooters by the summer of 2022.
- Government initiates to drive investment in electric two-wheeler manufacturing as well as the component manufacturing for this sector.
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