Why 2020 will be a landmark year in the evolution of Electric Two Wheelers in India
Updated: May 12
India commutes on two wheelers. The total population as well as new sales of two wheelers in India is around 6 times that of cars.
However, the number of two wheelers per 1,000 people for India is around the 130-150, which is still lower than many South-East Asian peers like Indonesia, Thailand and Vietnam who have around 280-400. China has over 500. This clearly means that the Indian two wheeler market is far from saturated.
The electric two wheeler market (E2W) in India is at a very nascent stage with just about 0.5% of the overall market (around 126k E2Ws were sold in FY 2018-19 compared to around 21 million petrol two wheelers). Lack of awareness, sales and after sale service network, higher capital cost, limited finance options and low resale value among other factors have hampered the growth of electric two wheelers in India.
Here are 10 reasons why I believe that 2020 will be the year electric two wheeler sales will break the shackles:- 1. Bharat Stage 6 (BSVI) · All vehicles sold in India from April 2020 will have to be BS6 compliant · This will increase the prices of petrol two wheelers by around 10-15% 2. Petrol Prices · BS6 petrol is expected to be costlier by around Rs. 0.8 per litre · US-Iran tensions expected to keep international crude prices high · Indian government does not have fiscal bandwidth to increase fuel subsidies and may actually end up reducing them and rightly so 3. Increasing Institutional Use · In the last 12-15 months a whole lot of corporates who use two wheelers for their operations have been piloting E2Ws · This includes companies in Grocery delivery, Logistics, Meat Delivery, Food Delivery, E-Commerce, etc. · In 2020, many of these will start implementing use of E2Ws in their fleet · Others who have been slow in E2Ws adoption will start moving fast 4. New Launches & Expansion · Various new electric two wheelers have been / are expected to be launched · Incumbent IC players as well various existing and new E2W OEMs are joining the party · Most models have detachable #lithium batteries which can be charged using the existing plug points at residences or offices or literally anywhere 5. FAME II · Has been slow to have an impact as I had discussed in my earlier article · Only around 3,000 E2Ws were sold with FAME II subsidy in 9 months ending Dec 2019 · FAME II subsidy allocation was for 10 lakh E2Ws in 3 years · I expect the government to relax the norms to push sales · Further, we now have many FAME II approved E2Ws available in the market, which was a constraint in 2019 6. State Government Push · Many State Governments are coming up with electric vehicle policy to push adoption of electric mobility in their state · Latest one was Delhi – looking to add 5 lakh EVs in 5 years · More states will follow suit and policies already announced start having an impact 7. Lower Two Wheeler Sales in 2019 · Based on the trends in the 9 months ending Dec 2019, Two wheeler sales for FY 2019-20 are expected to fall · This will be a first for Indian two wheeler market for at least 8 years, over which sales have consistently grown · Demand should come back sooner or later simply because of the under-penetrated nature of the industry, which would benefit E2Ws as well 8. Economic Slowdown · Companies and individuals are looking at ways to cut costs · E2Ws with lower total cost of ownership offer a great proposition since in many scenarios it works out cheaper than public transport as well 9. Better Finance Options · Limited finance options has been an impediment to E2W adoption · This year, expect the government to take steps to encourage banks to increase funding to electric vehicles · Various domestic and internationals development finance corporations and impact investors are exploring ways to finance and encourage electric vehicle adoption · Lease rental options are going to make a significant impact 10. Startups focusing on Electric Mobility · Many micro-mobility startups are offering services using electric two wheelers · Few third party logistics startups are doing deliveries exclusively on E2Ws · More E2Ws on the roads will lead to increase in awareness as well as adoption At Welectric, we are on a mission to enable rapid and mass adoption of E2Ws. We are already offering our multi-brand electric two wheeler lease rental solutions to corporates. This year we will launch E2W lease rental offering to individuals, which we believe will go a long way in increasing adoption. The impact that E2Ws can have on the lives of Indians is massive:- cleaner air, slow down climate change, cheaper mode of commute, lower fuel subsidy – better fiscal balance, lesser fuel imports – better balance of payments / trade deficit, opportunity to make India an EV manufacturing base, etc. 2020 is going to be quite exciting and critical in our journey in this direction.
Published by Vikas Jain Founder & CEO at Welectric 2020 is going to be a landmark year in the evolution of Electric Two Wheelers in India. Following are my top 10 reasons for this:-
1. Bharat Stage 6 (BSVI) getting implemented
2. Petrol Prices expected to be buoyant
3. Increasing Institutional Use
4. New Launches & New Players
5. FAME II can have a belated but significant impact if tweaked well
6. State Government Push
7. Lower Two Wheeler Sales in 2019
8. Economic Slowdown means individuals and institutions looking to cut costs
9. Better Finance Options
10. Startups focusing on Electric Mobility
I elaborate on each of these points in my article here. Happy to get your perspective and comments.
What are you excited about in #2020 ?