Auto manufacturers have been increasingly recognising electric vehicles as the technology of the future. Yet the common perception is that mainstream adoption remains a thing for the distant future.

Now, India Ratings & Research (Ind-Ra), expects the electric two-wheeler (e-2W) industry to grow at a strong compounded annual growth rate of 75-80 per cent over FY22-FY25. This would result in e-2Ws contributing 7-10 per cent of the overall 2W sales by FY25 from contributing below 1 per cent as of FY21.

The strong growth expected over FY22-FY25 is primarily because of the comparable total cost of ownership of electric vehicles (EV) and internal combustion engine (ICE) vehicles after incremental subsidies were announced under the FAME-II (Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles) scheme and incremental subsidies announced by a few States.

Also read: Shift towards high-powered scooters gathering momentum

Shruti Saboo, Associate Director – Corporates, Ind-Ra, observed that as a result of this, new model launches are expected over the next few years with better specifications, making the performance of an e-scooters on par with ICE vehicle. As more and more OEMs are entering this space, the production capacities are also likely to increase manifold by FY25, she said.

Data reported by the Centre for Energy Finance at Council on Energy, Environment and Water at Centre for Energy Finance (CEEW-CEF) shows that the 57,043 registrations recorded during April to September 2021 for high-speed EV have surpassed total registrations recorded in FY21 (40,837 units). Moreover, in September alone, sales reported by various e-2W OEMs shows a YoY growth of over six times.

Prominent e-2W players include major OEMs such as Bajaj and TVS. They also include dedicated brands such as Pure Electric, Hero Electric, Ola Electric, Okinawa as well as dedicated e-2W startups.

Market to be fragmented

At the moment it is not clear, which enterprise will be leading the charge to capture this new segment. Saboo expects the market to be fragmented. “The industry is likely to see an influx of new players, existing EV OEMs increasing their production capacities as well as conventional ICE players foraying into electric space in a bigger way. As such the industry could remain fragmented in the near to medium term, though in the long term the industry would see stronger players with technological expertise having an edge over others.” Saboo said.

Naveen Munjal, MD of Hero Electric, said: “There has been an inclination towards EVs with the FAME II subsidy, charging infrastructure, and easy financing options. Looking at the current demand, we aim to achieve double-digit growth by the end of the current financial year. To aid this growing demand, Hero Electric is ramping up the production capacity at its Ludhiana plant to five lakh units from one lakh. And in the next five years, we aim to reach a million vehicle mark.”

Rohit Vadera, the CEO, Pure Energy, emphasised that his company has planned to attain a sales volume of 2 lakh vehicles annually by FY25. In terms of production capacity, Pure Energy has planned to make it four times of what it has at present. “PURE EV has seen massive growth in the last two years and we are focusing more on the after-sale service part along with increasing the sales volume. Our R&D team is working on new products as well which will be mostly visible by next year in the market,” Vadera said.

Bhavish Aggarwal CEO and Co-Founder of Ola Cabs, in a recent blog, said: “We will bring this multi-modal mobility to all 1.3 billion people by Ola designed EVs customised for the diverse shared mobility needs. EVs are 80 per cent cheaper to run so the service will be more affordable and accessible to all.” Further, with miniaturisation and high energy density (neither possible in traditional vehicles), Ola’s EVs also create the opportunity for custom vehicle form factors serving many more use cases, better, Aggarwal added.