What's The Economic Impact Of Electric Two-Wheeler Adoption?
India is the world's largest market for two-wheelers, with over 200 million units sold in 2022, the vast majority of these vehicles are powered by internal combustion engines (ICEs). In recent years, there has been a growing push to adopt electric two-wheelers (E2Ws) due to their potential to revolutionise urban transportation. As governments and customers increasingly prioritise sustainable mobility solutions, electric two-wheelers offer an environmentally friendly alternative to traditional gasoline-powered vehicles. However, their impact goes beyond environmental benefits.
The market size of electric two-wheelers in India is expected to reach USD 4 billion by 2025, with a compound annual growth rate (CAGR) of over 40 per cent during the forecast period, according to industry reports. This growth can be attributed to the growing awareness to adopt eco-friendly lifestyle among the existing generation which is backed by the government's focus on promoting electric mobility through incentives and subsidies, which have been instrumental in driving market expansion. The introduction of initiatives such as the FAME-II scheme in 2019, which provides subsidies for the purchase of E2Ws, has significantly incentivised adoption across the country. Additionally, plans for a nationwide network of charging stations further support the growth of electric two-wheeler adoption.
Cost Savings for Costumers
Electric two-wheelers offer substantial cost savings compared to their gasoline counterparts. The price per kilometre of riding an electric two-wheeler is around Rs. 0.25/km compared to gasoline which is Rs. 2.50/km. With the rising prices of fossil fuels, consumers can benefit from reduced fuel expenses, allowing them to allocate their resources to other essential needs or save for the future. Additionally, the simplified drivetrain and regenerative braking system in electric two-wheelers result in reduced maintenance costs, including lower servicing and repair requirements. With fewer moving parts and no need for regular oil changes, air filter replacements, or complex engine tune-ups, electric two-wheelers require less frequent servicing and repairs, providing a hassle-free experience and additional financial relief to consumers.
The widespread adoption of electric two-wheelers creates new economic opportunities and job prospects. The production, sales, and maintenance of electric two-wheelers require skilled labour and contributes to the growth of the electric vehicle industry. This growth extends beyond the manufacturing sector, with charging infrastructure development, battery recycling, and software development for smart mobility solutions all offering employment opportunities. The overall economic impact includes job creation, skill development, along with increased tax revenues for governments and relevant authorities.
Revenue Opportunities
Along with offering increased job opportunities in the market and engaging semi-skilled as well as skilled manpower, the adoption of electric vehicles in India presents revenue opportunities in various areas:
• Charging Infrastructure: Governments and private entities can invest in charging stations and earn revenue through charging fees. Businesses can also offer charging services to attract customers, stimulating economic activity in commercial areas. The development of charging infrastructure creates opportunities for entrepreneurship and innovative solutions in the energy sector.
• Battery Swapping and Recycling: Battery swapping stations provide convenient battery replacement options for electric two-wheeler owners. Service providers can generate revenue through battery rental or swapping services. Additionally, the recycling of electric vehicle batteries can contribute to a more sustainable circular economy and generate revenue through valuable materials recovery.
• Ancillary Industry development: The production, sales, and maintenance of electric two-wheelers require skilled labour and professional intervention to create an electric vehicle to suit the Indian environment, which in turn contributes to generating new avenues for developing professional courses and have specialisation for the Electric Vehicle industry in the educational arena as well. Besides, the EV industry, being in its nascent stage, provides a huge arena for research and development striving to provide optimum solutions to its prospective buys, thus generating valuable intangibles as well.
The adoption of electric two-wheelers in India brings about significant economic benefits for both consumers and governments. Cost savings for consumers, resulting from reduced fuel expenses and lower maintenance costs, lead to increased disposable income and improved financial resilience. Governments benefit from reduced gasoline subsidies and incentives, job creation, and ancillary industry growth.
Furthermore, revenue opportunities arise from charging infrastructure development, battery swapping services, and battery recycling. As electric two-wheelers continue to gain popularity, their economic impact will play a crucial role in shaping sustainable transportation systems and fostering economic growth in India. With the government's support and market dynamics driving the adoption of electric two-wheelers, the economic benefits are poised to further accelerate in the electric two-wheeler segment.
The article has been authored by Nemin Vora, CEO of Odysse Electric Vehicles.
