The Indian electric two-wheeler (E2W) market, though in nascent stage now, is well-positioned to explode in the next 5-7 years by a push from both demand and supply sides. E2Ws may account for 20-25 per cent of the total two-wheeler volumes by then, says a Boston Consulting Group report.
The electric 2-wheeler (E2W) market in the country is fast emerging as a new space for innovation and activity. It is abuzz with excitement as old and new players are introducing new forms of technology, distribution, and customer service every day.
Sales of high-speed E2W in the first half of FY22 have already surpassed the sales achieved in FY21 (about 145,000 units). On a conservative estimate, the market may reach at least 2.5-3 million units by FY25 and 6-8 million by FY30, translating into 20-25 per cent penetration of the overall 2-wheeler industry. Most of this demand will come from the metro and urban regions.
Govt push
But, with the right push from the government and compelling initiatives from players, the market can potentially expand beyond these estimates and subsequently comprise nearly 50 per cent of the 2-wheeler market.
The expected expansion of the E2W market will be accompanied by shifts in models of distribution, models of ownership, models of monetisation, and models of customer segmentation. While some disruptions will be driven by OEMs, others will come from new players who will offer unique propositions to carve a niche for themselves, it said.
The demand for E2Ws will be driven by both the B2C (business to consumer) and B2B (business to business) segments. B2C demand will stem from consumers using vehicles for intra-city travel. B2B demand, on the other hand, will be majorly from e-commerce platforms, aggregators, courier services, etc., and others as they shift their fleet to E2Ws to leverage the better economics.
While the market will continue to be dominated by e-scooters, the nature of these scooters will shift drastically. Today, about 70 per cent of E2Ws are low-speed vehicles with a speed range of less than 25 kmph. However, as the market evolves, with better technology and a conscious push by the government via FAME II subsidies, both demand and supply will gravitate towards high-speed vehicles. By FY25, high-speed E2Ws may account for 80-90 per cent of the overall E2W market.
Though high upfront cost and uncertainty on residual value has impacted the attractiveness of E2Ws, demand for E2Ws will come from its lower Total Cost of Ownership (TCO) compared to ICE 2-wheelers. Even if we remove residual value, E2Ws fare at par with ICE 2Ws, if not better, from a TCO lens, the report said.