New Delhi: Legacy two wheeler makers continue their slow but steady march in the electric two wheeler (e2w) market as Ola Electric shrinks. In November (till date), TVS Motor Company and Bajaj Auto closed in further over market leader Ola – the gap in sales of TVS and Ola was not even 1500 units. As per data from the Vahan portal, Ola’s market share in November (till date) was about 24%, while TVS was a close second at over 22% and Bajaj was snapping at TVS’ heels at nearly 22%. So, the two legacy OEMs accounted for at least 4 in 10 e2ws sold this month as was bought by every fourth customer. So till November 29, Ola sold over 26,000 units, TVS sold over 24,700 and Bajaj sold just under 24,000 units. Ather Energy, the second electric first company, sold over 11,500 units whereas Hero MotoCorp, the market leader in ICE vehicles, sold just over 7000 units. Overall, sales of e2w till date in November were over 1.09 lakh units.
The march of the legacy OEMs comes amid several changes in the contours and competitive intensity of the e2w market. One, the formidable Japanese ICE two wheeler maker, Honda, has just announced its entry into this segment with India specific products and advanced battery solutions. Two, erstwhile leaders in the segment – Hero Electric, Okinawa and others – have all but ceased operations due to a mix of policy flip flops and subsidy misappropriation allegations. Three, subsidies have been substantially reduced for e2w. And four, the market is rapidly moving to lower price points. Market leader Ola has just announced the launch of Gig and S1 Z range of scooters starting at INR 39,999, effectively lowering the entry barrier significantly.
Will the two OEMs, Bajaj and TVS, continue to tighten their grip in a market which is already undergoing seismic changes in the coming months? To be sure, these legacy players have had several winning cards up their sleeves – a well established and wide sales and distribution network, quick turnaround in launching mass market products and building consumer trust as the market leader faced consumer ire due to frequent product breakdowns and its inability to address service issues at a large scale.
Of course, Ola is now addressing both these issues by ramping up its service network. And products from TVS and Bajaj (iQube and Chetak) have also had their share of quality issues. Now, an added complication could come from the entry of Honda Motorcycle & Scooter India (HMSI), the number two player in the ICE two wheeler segment with an all-India sales and distribution network and promise of product quality. Industry sources have indicated that the electric Activa will be launched in phases, beginning with markets in the South, followed by the West and parts of North India. In the second phase, the vehicle will be made available in Central and East India and parts of Uttar Pradesh.
Price games:
The heightened competitiveness in e2w market has led to each player either already launching or planning to soon launch lower pierced vehicles. The Executive Director at Bajaj Auto, Rakesh Sharma, had said after the second quarter results that the momentum of market share acquisition by Bajaj should increase further with an entirely new refreshed range and upgraded range. “The upgraded Chetak will not only have superior and competitive propositions, but will also significantly improve our margin structure,” he had said.
Sharma had also noted that Bajaj Chetak had seen a rapid market share increase, “from just 10% odd in Q2 FY ’24 to 19% in Q2 FY ’25”. Bajaj has also effected a tweak in its distribution and retail strategy for Chetak, with a prominent dealer pointing out that the company has begun selling Chetak through its existing motorcycle dealerships also, in addition to exclusive Chetak showrooms. This is a far cry from the initial retail strategy of Bajaj, which was based on selling Chetak through KTM showrooms. This new distribution strategy has ensured deeper rural penetration for Chetak. “This new sales strategy is already working. Rural sales are outpacing those in metro cities, where charging e2ws in apartment buildings is tough and discourages some customers from buying electric products,” this dealer had said.
Ola, meanwhile, has not disrupted the market with the new Gig and S1 Z range of scooters, it has also begun addressing the numerous service and maintenance complaints of existing customers.
As for TVS, it has already introduced new variants of the iQube portfolio so that now there are three battery options: 2.2 kilowatts, 3.4 kilowatts and 5.1 kilowatts. In the last few months, TVS has launched the iQube 09, which has a single battery pack and therefore a lower price than the other variants. The strategy on pricing is clear: the company wants to launch differentiated products at different price points instead of competing on discounts, which many others are offering on their product range.
Is there a sub one lakh rupee product also in the pipeline? The company has not confirmed this, merely saying new products are expected to be launched shortly to address different customer segments.
To learn more about the electric vehicle ecosystem and meet the key industry leaders, click here.
