Outlook On The EV Sector For Two & Three-wheeler For FY'24
The electric vehicle (EV) sector for two and three-wheelers in India is on the brink of a transformative journey, propelled by a convergence of market dynamics, industry expertise, and strategic adaptation strategies. As projections suggest, the Indian EV market, valued at US$2 billion in 2023, is poised to skyrocket to US$7.09 billion by 2025, with estimates foreseeing 10 million annual sales by 2030.
By 2030, electric two-wheelers could constitute 40 to 45 per cent of all EVs sold in India, while electric passenger vehicles may comprise 15 to 20 per cent. Remarkably, the Indian government's ambitious targets aim for EV adoption to soar to 70 per cent for commercial vehicles and 80 per cent for two-wheelers by the same timeline, as per a Niti Aayog report.
Moreover, Data from VAHAN indicate that electric two-wheelers in India have witnessed a remarkable surge in sales. Sales surged by 34.42 per cent in the third quarter of FY 2023-24 compared to the previous quarter, with a staggering 76,301 units sold in the fourth quarter of the current fiscal year.
Furthermore, electric three-wheeled commercial mobility solutions have become essential collaborators in India's e-commerce and last-mile delivery sectors. Electrification rates have surged from approximately 5 per cent last year to an anticipated 30 per cent by the end of this fiscal year (FY24), showcasing the rapid embrace of sustainable mobility solutions.
Driving Forces Behind the Growth
The robust growth of electric vehicles (EVs) in India is driven by several key factors, highlighting a paradigm shift towards sustainable mobility solutions. These driving forces include:
1. Affordability and Practicality: In the Indian market, affordability and practicality outweigh environmental concerns, propelling the adoption of EVs. Despite higher upfront costs, EVs offer the lowest lifetime cost compared to other alternatives like CNG. This cost efficiency and rising fuel costs, especially petrol and diesel, contribute significantly to the burgeoning demand for EVs.
2. Government Incentives: The Indian government's incentives and policies are pivotal in boosting EV adoption. Initiatives such as subsidies, grants, and tax benefits incentivise consumers and manufacturers alike to embrace electric mobility.
3. Reducing Battery Costs: Advancements in battery technology and economies of scale have led to a steady decline in battery costs, making EVs more accessible to a broader consumer base. As battery prices continue to decrease, the overall affordability of EVs improves, further driving demand and adoption rates.
4. Infrastructure Development: In support of the expanding EV ecosystem, the Indian government has introduced initiatives to encourage the development of charging infrastructure. Subsidies and grants promote the establishment of charging stations, addressing one of the critical barriers to widespread EV adoption. This infrastructure investment enhances the convenience and accessibility of EV charging, boosting consumer confidence in electric mobility.
The shift towards electric mobility is reshaping the market dynamics, with traditional petrol two-wheeler leaders experiencing declining sales. Concurrently, newcomers in the industry, such as Ola, and Ather, are witnessing exponential growth, signalling a significant transition towards electric vehicles. Notably, the share of petrol vehicle sales as a percentage of total vehicle sales has declined from 86 per cent in 2020 to 76 per cent in 2023, reflecting the growing preference for EVs among consumers.
Strategies and Outlook for the Future
In response to this burgeoning demand, EV companies are strategically adapting to the evolving landscape. From developing new verticals in gearbox and axle production to investing in research and development for sustainable EV solutions, industry players are leaving no stone unturned.
Furthermore, strategic partnerships and innovative solutions are being pursued to address integration challenges in the EV powertrain, underscoring a steadfast commitment to technological advancement. Investment in adaptive manufacturing, including the revival of unutilised facilities for producing body parts and chassis for electric vehicles, reflects a proactive approach to meet evolving market demands.
A key focus for industry stakeholders is to reduce reliance on imports and support domestic innovation.
With optimistic revenue expectations for FY24 and ambitious growth targets set for the next few years, EV companies are poised to capitalise on the immense potential of the sector. Collaboration and staying attuned to market developments are deemed indispensable for continued growth and innovation, emphasising a collective commitment to leveraging opportunities and surmounting challenges in the dynamic EV landscape.
In conclusion, the Indian EV sector stands at the precipice of unprecedented growth, fueled by a convergence of factors that promise to reshape the mobility landscape and drive sustainable progress in the years to come.
