Market Landscape & Potential Of EVs
India produced as many as 20 million two-wheelers a year pre-Covid. As a result of this pandemic, the market nosedived to approximately 13 million, then rose to 15 million (the peak is yet to come).
Hence, the potential for 2Wh EVs is quite large. Our industry is thus home to more than 800 start-ups working at different stages. Thanks to start-ups entering the market, electric two-wheelers have won more mindshare than market share. Two-wheeler EV markets already have all the ingredients in place - products, technology, manufacturing capacity, supply chain, hype - except for demand (which is on the rise day by day).
A total of 2,31,000 high-speed electric two-wheelers were sold in 2021. Although conventional vehicle sales have plummeted to their lowest level since 2012, EV two-wheelers account for only 1.1 per cent of the two-wheeler market which has risen to almost 4 per cent in Nov 2022. Several experts also believe the two-wheeler segment will be the fastest to make the transition and will be crucial to India's climate change targets and fuel import bills. Seven big manufacturers claim to have a combined manufacturing capacity of over 3 million units a year. That is 20 times the present sales. An additional 12 million units of manufacturing capacity have been announced by leading brands.
At this scale, the numbers start getting comparable to the conventional two-wheeler market. It will be interesting to see how things turn out for the EV 2-wheeler industry in the coming years. Moving on 2022-23, the growth has been phenomenon with expectations based on the growth and current run rate is to exceed 900 thousand vehicles. This is again a 400 per cent jump over last year numbers (This would be approx. 6 per cent of total 2-wheeler market in India). Going by this trend and capacities available clubbed with consumer demand and Government support, the numbers are expected to cross 3 million in 2023-24.
Most of the states have announced their EV policies which are very much in favour of consumer. There was a temporary fear in consumers regarding the safety of the product. However, the same has also been taken care by Niti Aayog & other policy making bodies, which have rolled out stringent audit & approval process in both power train and other components. Auto component makers are also not gearing up for mission 2025 when the targeted EV sales will be 25 per cent of the total industry. So, the industry is looking at 7 to 8 million EV sales in the year 2025-26 and accordingly the entire ecosystem is moving. Exciting times are ahead for people to be associated with 2-Wheeler EV's with many new measures in pipeline including battery swapping, improved charging infrastructure, ease of doing business, made in India products, quality products and all big brands in foray.
In order to qualify for subsidies (FAME II) in the EV sector, the government has formulated a very clear roadmap for how an EV is going to be built and what certifications & approvals are needed. Make in India is being rewarded today. However, many companies still import their products from China and other countries. Customs records each and every import, and this information is available to all regulatory bodies. These shortcuts will eventually be caught up by the law, which will impose huge penalties, including the cancellation of licenses. This is a surprising thing as when the law is very stringent and safety is the top most aspect then also some companies indulge in imports or shortcuts. It may be to do something with lower costs and ease of availability, more profits, Reduced Timelines, Readymade Product, Readymade designs & models, no investment is required (Just assemble and sell), Less team strength, No R&D required and above all no value addition required.
To highlight few positives that should be known to all is that EV leads to fuel savings, and lower maintenance make many EVs as affordable as gasoline-powered vehicles, and by 2025 EVs will even save consumers money over conventional gas vehicles. Additionally, government rebates and incentives can further reduce the cost of an EV as compared to an ICE engine.
If we summarise overall benefits to the vehicle owner then we can include that operating costs are lower, economical to maintain, registration is cheaper, environmentally friendly, better for health, better for energy security & network-friendly. Having said that, there are some concerns in the minds of consumers like no charging infrastructure in place as of now- it takes longer time to charge and the range in one full charge is low, Initial acquisition cost is high, replacement of batteries is expensive- further the supply of batteries is also limited.
