Electric two wheelers register a staggering 132% growth in 2021 but 2022 promises to be even better, Auto News, ET Auto

The year that has gone by has shown what difference subsidies can make in the evolution of a new age industry. Spurred by generous incentives under central government’s FAME 2 scheme with an extra helping from similar policies in as many as 18 states in the country, sale of high speed scooters shot through the roof in 2021 registering a jaw dropping 425% growth at nearly 1.43 lakh units.

As a result, for the first time ever, high speed scooters have outpaced their slower counterparts that need no registration or insurance but do not benefit from any government subsidy. Slow speed scooters grew at a relatively sedate 24% at 91,142 units. The overall segment more than doubled from just about a lakh units to 2.34 lakh last year. Electric mobility has come of its own in India’s two wheeler market.

“We haven’t seen better days than the last few months in the entire EV journey. In the last 15 years, we collectively sold around 1 million e2w, e-three wheelers, e-cars, and e-buses, and we will most likely sell the same 1 million units in just one year beginning January 2022,” said Sohinder Gill, Director General, Society of Manufacturers of Electric Vehicles (SMEV). “The recent positive changes in EV policy through FAME 2 are a game-changer and a decisive move by the government to ensure a cleaner and greener transportation sector, reducing reliance on expensive and contaminated liquid fuel. Customers have now started shifting in large numbers from petrol two-wheelers to electric ones due to attractive prices, lower running costs, and lower maintenance. A significant percentage of customers also factor in the environment and sustainability in their decision to buy an electric two-wheeler.”

The shift from unorganised low speed to organised high speed scooters even though not unexpected was still sudden in 2021. Low speed scooters that are classified as those that cannot go faster than 25 kph infact logged negative growth in the last 2 quarters of 2021–with market share declining from a high 70% in previous years to less than 15% in the Oct-Dec quarter. The FAME 2 policy only incentives vehicles based on their battery capacity at Rs.15000 per kwh, which has narrowed the gap in price between low and high speed scooters. Hero Electric and Okinawa held on to their top two positions in the market while Pawan Munjal backed Ather Energy broke into the top 3 last year.

“The year 2021 was disruptive for the EV sector. Customers have made a conscious shift to switch to EVs, further fueled by rising fuel prices, better charging infrastructure, and awareness. Moreover, the Government has also shown tremendous support with a revised FAME II subsidy structure and additional statewide policies have helped propel the segment,” said Naveen Munjal, managing director, Hero Electric. “We witnessed a hockey stick growth with upward sales momentum resulting in higher demand paving the way for production capability expansion at our Ludhiana plant from 1 lakh to 5 lakh units to manufacture over 1 million EVs by 2025. The coming years will witness increased EV penetration in the country with targeted sales of 30% private cars, 70% commercial vehicles, 40% buses, 80% two and three-wheelers by 2030.”

Bull run ahead

The story is only getting started. The growth in 2021 was largely organic in nature with established brands like Hero Electric, Okinawa, PureEV, Revolt, Ather, Ampere, Bajaj Auto and TVS registering strong sequential growth. This year will see the market entry of many players including Ola Electric which began deliveries of its scooters from December 15, Bounce Infinity, Simple Energy, Tork Motors and TVS backed Ultraviolette. The entry of heavyweight Hero MotoCorp will further add to the mix.

Disclaimer:
1.The data doesn’t include low-speed segment
2.The above data has been collated from the Govt records of Vahan

“We are expecting new players to enter and disrupt the market. Several brands have been trying to catch up with the pace in the EV segment and have come up with innovative ideas and products,” said Sumit Chhazed, co-founder, OTO–a two wheeler buying and financing platform. “Bounce has introduced their new Bounce Infinity E1 which comes with the battery swapping infrastructure. Ola had invested in product diversification by bringing in their Ola Electric scooter and received 1 lakh plus bookings. The number of bookings shows how welcoming consumers are towards the adoption of EVs. Legacy brands such as TVS Motor, Bajaj, Hero Motocorp are not far behind as they have been consistently trying to invest in the best technologies, development, and capacity expansion.”

Backing this growth in sales, investors are also placing their bets on EV firms. In 2021, funding to EV tech startups hit an all time high touching nearly USD 444 million (INR 3,307 crore) across more than 25 deals which was 255% higher than 2020 and 12% higher than pre-pandemic 2019. The result of this will manifest itself in years to come starting 2022.

“We will see an increase in demand with substantially increased competition, considering individuals’ awareness and potential of owning or switching to electric vehicles. By 2025, the market is projected to reach 10% from the current 1%, and, with conducive policies, it will further jump to 20%,” said Munjal. “India is the largest two-wheeler market with 17% segment space, with 1 EV per 125 vehicles. There is heightened interest and investment in the segment estimated to be at INR 94,000 crores in the next five years.”

With greater awareness among consumers and the industry working on ways to mitigate challenges like charging infrastructure and range anxiety, the tailwinds outweigh potential headwinds.

In the coming years, EV financing especially for Electric-2- Wheelers will be the most important enabler for the adoption of Electric Vehicles. Attractive economics and government pushes have already significantly increased demand for Electric- 2- Wheelers and the industry is expected to grow significantly, as we foreseeJeetender Sharma, Founder & MD, Okinawa Autotech

“Electric-2-Wheelers are currently sold on the basis of their range alone and it will be important to develop a framework to balance fallbacks against more attractive attributes of e-mobility such as flexibility, availability and affordability,” said Jeetender Sharma, founder and managing director, Okinawa Autotech. “In the coming years, EV financing especially for Electric-2- Wheelers will be the most important enabler for the adoption of Electric Vehicles. Attractive economics and government pushes have already significantly increased demand for Electric- 2- Wheelers and the industry is expected to grow significantly, as we foresee.”

For 2022, SMEV’s projection is not double or triple but upto 6 times growth over 2021. This at a time when the traditional petrol powered two wheeler industry is struggling for growth like never before.

“Going by the recent monthly trends, the next 12 months may see 5 to 6 times the growth over the previous 12 months,” said Gill of SMEV. “Currently, all-electric two-wheelers sold in India are called electric bikes or e-bikes, but in fact, they are either electric motorcycles (around 2% of the market) or electric scooters (98%) that can comfortably seat two people and look like their petrol two-wheeler counterparts. There are no e-scooters like the ones seen in North America or Europe on which a rider can stand and go short distances. Electric cycle sales in India (popularly known as e-bikes globally) are also negligible and just beginning to happen. However, in the next 2 to 3 years, we will have products across all segments, ranging from e-scooters, e-motorcycles, and e-cycles from large and organized players. In four to five years, we can now confidently predict that around 30% of the two-wheeler market will be electric.”

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“We haven’t seen better days than the last few months in the entire EV journey. In the last 15 years, we collectively sold around 1 million e2w, e-three wheelers, e-cars, and e-buses, and we will most likely sell the same 1 million units in just one year beginning January 2022,” SMEV Director General Sohinder Gill said.

Rakesh Sharma, ED, Bajaj Auto, says it is the birth of a new industry and the disproportionate excitement is “only to be expected”. “In fact, new entrants and the high-profile discussion will aid the transition of the industry,” says Sharma.