The electric two-wheeler market in India is gearing for a big consolidation and rejig in its product portfolio. While low-speed scooters that go at a maximum speed of 25km/hour constituted a whopping 90 per cent of all the electric two-wheelers sold in FY20, EV manufacturers are banking on high-speed scooters to gain traction in the long term.
“Today, lower performance spec electric two-wheelers make up a significant chunk only because of the lack of alternatives. We will witness a transition in the coming days, with new and existing brands launching more efficient and powerful electric two-wheelers that are near-equal or better in performance than their internal combustion engine (ICE) counterparts,” Ravneet Phokela, chief business officer of Bengaluru-based electric two-wheeler company Ather Energy, told BusinessLine .
As the electric two-wheeler market grows, there would be a shift towards middle-speed and high-speed models, as battery prices would also be going down over the next 2-3 years, said Sohinder Gill, Director General, Society of Manufacturers of Electric Vehicles.
Low-speed electric scooters have gained traction owing to cost — at around ₹30,000 — and also due to the lack of need for registration with RTOs, experts said. This is while high-speed electric two-wheelers are priced above a lakh or so.
Companies that have rolled out high speed electric scooters with good features are not eyeing big volumes currently but looking at establishing their presence in the market, Gill said. “And they are certainly going to expand the market because when big names come in — when good brands come — the market is going to become very, very large. In that, 10-20 per cent (of the overall electric two-wheeler market) also will be very high,” explained Gill.
“Our attempt was to present a unique and differentiated option to the customer,” affirmed Rakesh Sharma, executive director, Bajaj Auto, referring to the Bajaj Chetak, the company’s foray into electric two-wheelers. At 100 per cent charge, Chetak can run up to 95 km, or five hours, based on the speed and power consumption.
Gill also drew attention to how big companies like Bajaj Auto and TVS Motor have only recently forayed into the electric two-wheeler market, which is still dominated by start-ups.
The electric two-wheeler market is in for a big consolidation and change, he added, and the current ratio, skewed in favour of low-speed scooters, is going to gradually change. But, given that customers in India will always be price-conscious, even with the scale set to increase and battery prices set to fall, cheaper, low-speed models will not constitute a minority any time soon, said Gill.
Low-speed electric scooters accounting for majority sales in the electric two-wheeler market has been the trend in previous years too, Gill pointed out.
With the launch of the FAME II scheme in April 2019, many electric two-wheeler models that were eligible for subsidy under FAME I became ineligible under FAME II due to stringency related to localisation norms as well as vehicle specifications, said Hetal Gandhi, Director, CRISIL Research. “As a result of this, the organised e-two-wheeler market, which largely comprises higher speed vehicles, has seen a contraction in demand in fiscal 2020, while the low-speed ones have seen an increase in share,” she said.
Under FAME I, 88 models of electric two-wheelers manufactured by 18 manufacturers were eligible for subsidy, whereas, under FAME II — as of January 2020 — this has been reduced to 18 models by seven manufacturers, said Gandhi.
Meanwhile, Ather’s focus will continue to be on “well-designed and high-quality products”, and it won’t be entering the low-spec end of the market, said Phokela. “We don’t believe that is the right way to grow the market,” he added.
Even though EV sales registered a 20 per cent y-o-y increase in FY20 (excluding e-rickshaws), Phokela said that this doesn’t reflect the “massive growth potential” of the EV market, especially two-wheelers. “The demand was always there, but it needed strong, well-performing products that are viable alternatives to ICE vehicles to unlock this demand,” he emphasised.
Jeetender Sharma, founder and managing director of Gurugram-based electric two-wheeler maker Okinawa Autotech Private Ltd, said the company feels that if the EV sector has to grow, then the focus has to be on the high-speed vehicles. “High-speed vehicles provide the best alternative to ICE customers. The market can shift to EV as the high-speed vehicles can be considered performance vehicles, but with a lower running cost for customers at ₹0.20/km, against the ₹1.80/km in ICE,” he said.
“We believe that the market is still evolving and the demand for high-speed vehicles is set to rise over the coming years,” said Pankaj Tiwari, India Business Development Head - Nexzu Mobility, an electric mobility company founded in 2015. He also drew attention to how entry-level EV buyers opt for low-speed EVs due to the cost factor. “Once they experience the comfort and convenience of EVs, they upgrade to high-speed variants with more power and cutting-edge features,” said Tiwari.