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Electric 2-wheeler (E2W) players and electric vehicle (EV) component makers have committed a cumulative investment of more than ₹20,000 crore as the shift from ICE (internal combustion engine) to EV two-wheelers is picking up pace.
“On the OEM side, investments of more than ₹10,000 crore have been committed by electric two-wheeler start-ups and incumbents over the next 3-7 years. Investments will only increase going forward,” Shamsher Dewan, Vice-President & Group Head, ICRA, said during the rating agency’s discussion on the automobile sector.
PLI boost
Also, the Centre’s PLI scheme is expected to drive more investments in the EV and component sectors.
The demand for E2Ws has been propelled by a significant increase in the cost of ownership of conventional two-wheelers on the back of rising fuel prices and higher acquisition cost due to regulatory changes. Also, the Centre’s extension of subsidy schemes and State governments giving sops to EV buyers are encouraging purchase of electric two-wheelers whose cost of ownership has come down significantly.
As a result, sales of electric two-wheelers have more than doubled in April-November 2021 compared to the corresponding previous period. High-speed electric two-wheeler sales during H1 of this fiscal were higher than the total volumes of FY21. For January-November 2021, total volumes crossed the one lakh mark, for the first time ever. The share of electric scooters touched a high single digit, 7-8 per cent, in the overall scooter volumes in November.
EV penetration
ICRA pegs electric vehicle penetration at 8-10 per cent in the two-wheeler segment by FY25. But given the current momentum and trends, it could be higher at 13-15 per cent by then.
Component makers have cumulatively committed about ₹10,000 crore in the EV parts ecosystem — by way of joint ventures with global players as also on their own. “Batteries make up about 40 per cent of the overall EV cost and we are still dependent on imports for this. As far as localisation of components is concerned, chassis and other body parts are the most localised. We see some traction in motors and battery management systems. But it will take some time for the majority of the components to get localised,” S Vinutaa, Assistant Vice-President & Sector Head, ICRA.
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