With the growing attractiveness of the the electric vehicle segment the two wheeler market for electric vehicles has been registering growth like never before. For the year 2021, total sales this segment has galloped by a whopping 132 percent as compared to last year.
Total sales in terms of number of units was over 2.33 lakh units as compared to just one lakh units in 2020. It is pertinent to note that the high-speed segment registered higher growth whereas the low speed segment (less than 25 km per hour speed and no requirements of a licence or registration) grew at a lesser rate off only 20 to 25% . Normally one would have resumed that it is the cheaper models that is the low speed category that will be taken up for adoption first. It is natural to think that people would test out the technology with the low cost models and not go all out and substitute the high speed or for more expensive bikes. The latest figures point out to a different story- the market share for the low speed segment has actually tipped and is now less than 15% if one looks at the recent quarters. One reason could be that the low speed category does not provide subsidy benefits that the government policy allows. The subsidy benefits are only applicable for the high-speed category and that’s also based on the battery capacity that these bikes have(about rupees 15000 for each kilowatt hour of battery capacity). The Indian consumer who is especially price conscious, would be quick to calculate and arrive at the conclusion that it makes more sense to opt for the high speed category bike – in fact in some cases after subsidy, this cost will turn out to be lower, than the low speed category bike.
There are broadly three categories that one can segment the market into and while the low speed category has been it slow in terms of sales traction it is the mid segment with speeds up to 50 km per hour that is gaining momentum. One reason is that it is well-suited for fleet operations and slowly getting into the fleets of last mile delivery fleet operators. We spoke to the management team of Unfuel, one such fleet operator who mentioned the quick pay back and the financing arrangements that they could conveniently structure behind the pick up take amongst this customer segment. The manufacturers are also expressing satisfaction over the pace of of reforms and new policy rollouts under FAME 2. Of course there are other challenges in terms of supply chain disruptions due to the recent pandemic and chip shortages which have to be dealt with but right now the demand remains strong. The sales outlook for future is also right and similar double-digit growth is expected from all the top five manufacturers including Hero Electric, Ola & Greaves Cotton.
One definitely hopes that the future and 2022 will bring in more maturity to the market and increased awareness will help in wide spread adoption for electric vehicles.
The only challenge remains around quelling range anxiety for riders, but that can be initially handled if the daily rider range is less than 80-100 kms. This will cover majority of the office commutes. We will talk about this in one of our future posts and cover the various initiatives being taken to lay out a comprehensive charging station network that can allay fears related to adequate options for charging electric vehicles.