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Published on: Nov. 14, 2022, 11:54 a.m.
Electric two-wheelers: The ride into the future
  • India has up to 80 EV start-ups, the majority of which are in the E2W area

By Sabin Iqbal

Though the bumpy roads are not behind them, the players in the electric vehicle two-wheeler (E2W) segment are making their presence felt, without much sound and smoke, on the Indian roads. With annual growth rates of over 60 per cent, India and Indonesia are expected to be two of the world’s top three markets for E2W by 2030, indicates a McKinsey survey. Its report, ‘Capturing growth in Asia’s emerging EV ecosystem’ acknowledges that consumers in Asian countries have been adopting EVs at varying rates.

Asia’s emerging markets are the largest micro-mobility markets.  “As electric models become more cost-competitive and, as authorities incentivise customer uptake, E2Ws will become the major method of transportation in the region,” says the report.

Asian EV brands are also on the increase and, while China has the most notable electric four-wheeler brands (such as BYD and Hongguang), India has up to 80 EV start-ups, the majority of which are in the E2W area, according to data from OTO Capital, a two-wheeler financing start-up. “We expect the industry to hit 1 million units by 2022-23,” affirms Naveen Munjal, managing director, Hero Electric.

“According to research, it will hit 9 million units by 2026-27. We want to produce about 4 million E2W units by 2026. The market for E2W is charged up and the conversion from internal combustion engine (ICE) to EV is clearly moving faster.” Hero Electric will invest Rs2,500 crore to launch 4 million units by 2026.

“The shift from ICE two-wheelers is already happening, as is evident from the growing demand E2W has seen in the past 12 months,” observes Ravneet S. Phokela, chief business officer, Ather Energy. “Our company has grown phenomenally in 2022, with a 202 per cent y-o-y growth (April–October) in the number of active Ather scooters on-road. While we registered our best-ever monthly sales, delivering 8,213 electric scooters in October 2022, this is still a fraction of the pre-orders we received.”

“Automotive is one of the top five high-growth sectors in India,” reveals Gajendra Chandel, chairman, BattRE, a mobility start-up. “And, EVs are leading this amongst the start-up ecosystem. BattRE Electric was born out of a foresightful idea in the 2W space, with a need for electrification that brings differentiated and unparallelled service to the customers.”

According to reports, BattRE has raised an undisclosed amount as seed fund from a group of investors, led by Agility Ventures. “Our E2Ws are riding on our strategic differentiators -- deep distribution, competitive pricing with advanced features,” contends Nishchal Choudhary, founder & CEO, BattRE. “With our ‘ahead-of-the-curve’ products, we aim to reach every Indian district by 2025. The seed fund will help us plan and execute this goal and enable the next phase of our growth”. 

The company aims to clock Rs1,000 crore revenue by 2025. BattRE was founded in 2017 in Jaipur, Rajasthan, by Nischal and Pankaj Sharma to take electric mobility to every Indian city. Currently, it has a network of 400 plus dealerships in 21 states and 276 towns, across the country.

  • Munjal: the E2W market is charged up

Major players

“EVs are the future of mobility and are poised to reach $13.8 billion market size by 2027, growing at a 100 per cent CAGR,” forecasts Dhianu Das, founder, Agility Ventures. “And, we are confident that BattRE would dominate the two-wheeler space in that segment, with their deep distribution and competitive pricing strategy. We are confident that BattRE will be amongst the top four E2W companies in India by 2023-24”. 

Hero Electric has dominated the electric two-wheeler market, with a share of 28 per cent in 2021-22. The other major players are Okinawa and Ampere and Ather Energy.

Ola Electric claims to have rolled out the 1,00,000th scooter from its all-women-run Future factory in Krishnagiri, Tamil Nadu. Says Bhavish Aggarwal, founder & CEO, Ola Electric: “Since embarking on our journey towards electrification of India, we have unlocked the potential of EVs in our country by offering customers a much superior product and experience than what any petrol alternative can offer. This milestone is just the beginning. The next 100,000 will be in half this time, as the transition to EVs gathers even more pace. India is closer towards making Mission Electric a reality than ever before.” In October 2022, Ola claims to have clocked 20,000 units in sales. It is planning to open 200 centres across different formats by March next year. 

The EV industry is seeing fast adoption, with the demand for EVs growing significantly in the last one year. Transition to EVs is inevitable, as it is a smarter, more reliable and hassle-free mode of mobility. “While we delivered 15,929 units in 2021, we have already surpassed that number in 2022, delivering 41,599 scooters in the first 10 months of the year. Now, we are looking at hitting the five-digit monthly sales mark this year,” says Ather’s Phokela.

Customers are beginning to have a range of options at various price points due to the advent of new brands and products in the EV two-wheeler market. As consumer choice grows, the market will mature at an even faster pace than it is now. In 2021-22, e-scooters made up just around 5 per cent of the entire scooter industry. “In 2022-23, we expect a 25 per cent e-scooter penetration, which is quite phenomenal. India’s electric revolution rides on two-wheelers and I am optimistic that, by 2025, e-scooter sales will contribute 45-50 per cent of the total sales in the scooter industry,” adds Phokela.

Two-wheeler manufacturer, Honda Motorcycle & Scooter India (HMSI) is expected to launch its first electric scooter soon, costing less than the current generation of Activa that runs on petrol. The development of the electric scooter has been confirmed by Atsushi Ogata, president, HMSI.

According to Ogata, multiple models of Honda scooters are in the production and the company plans to sell one million EVs towards the end of this decade. The manufacturer now plans to have a market share of 30 per cent in the EV sector by the end of this decade.

  • Komaki’s Venice Eco: equipped with fire resistant battery

Komaki arrives 

Japanese EV company Komaki has launched a high-speed electric two-wheeler Venice Eco that is available in India at Rs79,000. “With the addition of Venice Eco on the Indian roads, Komaki will expand its presence in the sector,” says Gunjan Malhotra, director, Komaki Electric Division. “In view of the massive acceptance of our previously-registered models by the Indian customers, I am optimistic that Venice Eco will soon become synonymous to electric vehicles”. 

The Venice Eco is equipped with fire-resistant Lithium Ferro Phosphate (LiPO4) technology and real-time lithium battery analyser that doesn’t lead to fire in extreme cases, as these cells contain iron, the company says. The new EV two-wheeler is designed with third generation TFT screen, which helps in better navigation and stress-free ride, it reveals.

As per the findings of a survey done by Windmill Capital, a SEBI registered Research Analyst group, 43 electric vehicle start-ups in India have raised $673 million (Rs5,494 crore) in 2022 and counting. In 2021, the number was about $6 billion (Rs48,984 crore).

From sales of just 56,000 electric two- and four-wheelers in 2019-18, India saw sales of about 300,000 electric two- and four-wheelers in the first half of 2022-23. With the government targeting to have EV sales accounting for 30 per cent of the private cars, 70 per cent of the commercial vehicles and 80 per cent of the two- and three-wheelers and, with industry participants firming up their EV launch plans, the momentum has just started building up in the sector.

The challenges

While India looks at electric vehicles as the future of mobility, challenges to the electrification of the vehicle still persist. One of the primary challenges the industry is facing is ensuring quality and consistency across products present in the market. 

“Products that enter the market without testing and validation have led to numerous fire incidents,” informs Phokela. “OEMs source raw materials from numerous suppliers and the key challenge is to ensure high-quality production across every supplier. While you can add multiple suppliers quickly to ramp up production, the outcome should meet the same quality criteria”.

EVs’ registrations hit an all-time high this year (68,324) in October, which is 29 per cent more than what was in the previous month. Between January and October 2022, EVs’ registrations have accounted for 4 per cent of the total two-wheeler registrations. Though the growth rate is encouraging, some say it is not good enough to touch the expectations.

Taiwanese start-up Gogoro Inc sees huge scale for its battery-swapping technology in India, joining the race to get a slice of an electric vehicle market, which is expected to reach 400 times its current size by the end of the decade. “India represents the holy grail, where we see our technology making an impact,” says Horace Luke, CEO & and co-founder, Gogoro, the Taiwanese EV major (which has 80 per cent of the Taiwanese market share). The electric scooter and battery-swapping-station maker is going to get its ‘technology honed, fine-tuned and calibrated to the India condition’. The company has tied up with India’s Zypp Electric.

  • Aggarwal: unlocking the potential of EVs

    Aggarwal: unlocking the potential of EVs

This comes at a time when the government has been pushing for faster adoption of electric scooters and rickshaws in India, launching a battery-swapping programme earlier this year. It expects investments in the Indian EV industry to more than triple to $20 billion by 2030 from $6 billion in 2021. 

Safety takes a backseat

According to Sohinder Gill, CEO, Hero Electric, and director general, Society of Manufacturers of Electric Vehicles (SMEV), “EV two-wheeler market may fall short of the anticipated 1 million units by 2022-23.” Adds Rakesh Sharma, executive director, Bajaj Auto: “Though the progression is strong, it is slower than expected due to a combination of supply-chain issues, pricing, and to some extent, worries about quality.” 

On the other side, some experts strongly feel that people are rushing in to have a piece of the pie. “As much as 80 per cent of the Indian EV makers are not doing it right,” remarks Luke of Gogoro. “Most of them are manufacturing them in an ad hoc manner, without considering safety, durability and quality. A lot of people are rushing to it.”

Phokela agrees to the concern. “The industry has been witnessing a phenomenal spike in demand for 2W EVs over the past 12 months. In a fast-growing market, the temptation to launch early without a mature product is very strong. But it’s a dangerous temptation to give in to. EV manufacturers must invest enough time and conduct multiple tests to ensure the quality and consistency of their vehicles. Some of these tests are time-consuming, but they are crucial to ensure safety and cannot be compromised.”

“At Ather, quality is paramount and needs to be the first and foremost priority, irrespective of the scale of production,” adds Phokela. “We firmly believe that internal test standards for OEMs should be much more stringent, keeping in mind that the base testing standards laid down by the government authorities will not be enough to cover all the real-world situations that an EV may undergo. Consumers’ trust is by far the most critical factor in India’s journey to the electrification of mobility, and OEMs must ensure that they work towards providing quality, and consistency while ensuring safety and reliability. For us at Ather, safety is not a checkbox, it is an active choice.”

“Right from the launch of our earliest scooter, Ather has set the benchmark for consistency and reliability. We follow strong engineering and product development principles in bringing any scooter or a feature to market, ensuring that we don’t compromise at any stage. We have deeply invested in R&D, engineering, testing, and understanding of the ecosystem to design for India by ensuring that the vehicle is tested in the most extreme conditions. In fact, we launched our first scooter after six years of working on prototypes because no one in the country had the knowledge or the resources to make EVs. We believe that the quality benchmark as an OEM needs to be considerably higher than the suggested compliance benchmark to ensure consumer safety,” adds Phokela.

  • Ather EV scooter: quality is paramount

Government’s role

The EV industry has witnessed continuous support from the government to quicken its adoption. FAME II, state subsidies and the introduction of PLI schemes for semiconductor and battery manufacturing, among several other initiatives, have been rolled out to meet the government’s long-term vision and focus towards making India the global EV manufacturing hub. 

“While Ather Energy created India’s first high-performance electric two-wheeler category, the FAME II policy encouraged the traditional OEMs to introduce more such feature-driven electric vehicles. We believe that it is because of these progressive schemes that we have multiple brands offering a range of products across various price points. These initiatives have made switching to EVs more lucrative and financially viable in the country for both consumers and manufacturers. Therefore, to keep up consumer demand and encourage better EV vehicles to be introduced by OEMs and drive faster adoption of EVs, the FAME II subsidy must continue well beyond 2023. The EV sector requires such incentives to accelerate manufacturing and consumer adoption.”

Gill has a piece of advice for the start-ups in the segment. “Unless they (the start-ups) have a national play, they may have to rethink of their strategy.” The numbers, the enthusiasm and the sales forecast augur well for a steady growth for the E2W market in the country provided the early crimps -- incidents of fires, pricing and quality -- are duly ironed out.

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