India Ratings and Research (Ind-Ra) expects the electric two-wheeler (e-2W) industry to grow at a strong CAGR of 75%-80% over FY22-FY25. This would result in e-2Ws contributing 7%-10% to the overall 2W sales by FY25 from being below 1% as of FY21. As e-mobility penetration is likely to be more in scooters, e-scooters sales as the overall percentage of total scooter sales would be much higher at 20% -25%. This growth, the agency expects, would majorly be driven by the reducing delta between the price of an electric vehicles (EV) and internal combustion engine (ICE) vehicles due to the increased subsidies under FAME-II scheme along with the newer model launches anticipated over the next few years.
believes e-scooters would lead electrification in this industry segment, given
their higher urban presence. Moreover, the new models launched recently as well
as planned over the next few years are likely to have a better range, speed and
battery size, thus making the performance of e-2W comparable to existing ICE
variants available in the market. Electrification in motorcycles could take
fairly longer as the performance of the available e-variants is still not at
par with that of an ICE vehicle, and enhancing battery configuration could
impact both weight and cost of the vehicle. Moreover, motorcycles draw a significant
proportion of their overall sales from rural market, where the presence of e-2W
original equipment manufacturers (OEMs) is limited.
The total cost of ownership of an e-scooter is now comparable to that of an ICE scooter; the former becomes economically more feasible in case of a long distance travelled. As such, Ind-Ra expects higher adoption of e-2Ws by e-commerce companies/delivery-based application companies as well as bike-taxis, thus supporting a further ramp up of EV penetration in 2Ws in India.
Nevertheless, to push the electrification, e-2W OEMs need to increase their presence which is restricted to metro and Tier-I cities. Also, the industry needs to increase models/variants available in the market which is limited compared to an ICE vehicle as well as develop supporting infrastructure. While charging infrastructure remains the biggest challenge in India, the agency believes that 2Ws are better placed given the low battery size which facilitates easy home charging. The initiatives by large players to set-up faster plug-in charging stations as well as a battery swapping environment will play an imperative role for sustainable e-2W adoption.
Ind-Ra expects the industry to undergo significant changes over the next five years with the emergence of new players, enhancement of production capacities by existing players, conventional ICE OEMs entering into electric space in a bigger way and formation of strategic/technological alliances to reap benefits amid a growing market demand. Several new launches with better performance are also planned over FY22-FY25.
Additional information is available at www.indiaratings.co.in.
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