In this article, we will be doing a 6-Point Analysis of the Electric Two-Wheeler Market in the country. So, Let’s start with this 6 point analysis.
6-Point Detailed Analysis:
The 6-Point Detailed Analysis of 2-Wheeler Ecosystem will include the following factors:
Electric 2-Wheelers- 6 Point Detailed Analysis
i) Electric Two-Wheelers Environment:
- 2-wheeler electric vehicle sales have grown with 55% CAGR in 5 years.
- By FY22 sales number will crores 2,00,000 units.
- Fall in battery prices is making 2-wheeler EVs prices comparable to ICE counterparts.
- Internal Council of Clean Transportation (ICCT) states electric 2-wheeler prices will equal ICE prices in 2027 (100km range).
- Electric Vehicles are highly being encouraged by the Government- Central as well as State, where it is providing several benefits and favorable policies. Some of the key steps of Government’s are:
- 18 Indian states announced electric vehicle policies and 6 more are expected.
- GST of EVs is at the lowest slab of 5%.
- Waive off of registration charges.
- Many market experts are expecting that in the coming 5-years, about 70%-75% of total 2-wheelers sales will comprise 2-wheelers electric vehicles in the mid and economic segment.
ii) Localisation of EV Parts:
Source: NITI Ayog Localization of EV Parts
- Battery cells have the highest % cost contribution at 24% among the auto components.
- Battery cells localization currently is a very low and low expectation of the same to be completed by 2025.
- Chassis & Body has the highest localization.
- Motor & Power Electronic localization is similar to Battery cells but high expectations to complete the same by 2025.
- Mainly the batteries are imported and hence we are more dependent on foreign bodies for this and therefore localization will take time here.
iii) Previous FAME-II Policies:
- 3-Years bank Government of India came up with Faster Adoption and Manufacturing of Hybrid & EV (FAME-II) in April 2019.
- This policy was launched to increase the adoption of electric vehicles in India. This policy stayed till March 2021.
- The budget of FAME-II was Rs. 10,000 Cr. where subsidy was provided of Rs 10,000 per kWh. Also, there was a cap to this subsidy that was 20% of the e-two wheeler cost.
- This policy was aimed to Incentivize purchase of 7,090 electric business. 35,000 4-wheelers. 5,00,000 3-wheelers and 10,00,000 electric 2-wheelers.
iv) Disappointment of FAME-II Policies:
- The target set for the FAME-II policies were not met due to:
- Electric two-wheeler sale till Jan-21 52,959 units. Sales under the scheme were only 31,813 units.
- High localization norms.
- Increase in prices of subsidized products.
- Most of the products did not qualify for incentives.
- Qualified products did not get the amount of subsidies needed.
- Achievement of only 4% of state targets.
- Slump in sales due to COVID-19 pandemic.
v) Revised FAME-II:
- Now again Government of India has extended the term of this policy till March 2024.
- Also, the subsidy has been increased by around 50% to Rs. 15,000 kWh while the maximum cap was now increased to 40% of e-two wheeler cost, which was 20% in the first phase of the policy.
- With these steps, the prices of electric 2-wheelers vehicles can get decrease by Rs. 7,000 and Rs. 20,000.
- Ministry of heavy industries mandated Energy Efficiency Services Ltd (EESL) to procure 3,00,000 EVs for different authorities.
Electric Two-Wheeler Subsidies by States:
Electric 2-Wheeler: Subsidies by States
- States such as UP, Karnataka, Tamil Nadu, and MP do not offer any direct subsidy to the buyers.
- While most of the states offer 100% of the road tax exemption, Gujarat and Kerala offer only 50%.
- Delhi offers a maximum subsidy of Rs. 30,000 followed by Maharashtra at Rs. 25,000.
EV PLI Schemes from Central Government:
- Central Government has also introduced the Production-Linked Incentive (PLI) Scheme to boost domestic margin while aiming at competitive pricing, generating employment, and reducing dependency on imports.
- Eligibility Criteria for this Scheme:
- Global OEM revenue of Rs. 10,000 crores for 18% incentive.
- Global investments in fixed assets of Rs. 3,000 crores.
- Minimum turnover of Rs. 2,000 crores for 13% incentive
- Total scheme amount for auto and auto ancillary is Rs. 26,058 crores.
- A maximum of 18% incentives will be offered by the government.
- FAME II and PLI scheme for advanced chemistry cell.
- Govt expects this scheme will bring in investments of Rs. 42,500 crores.
- Expected job creation by the scheme at 7,50,000.
vi) Electric 2-Wheeler OEMs:
Electric 2-Wheeler: OEMs
- Two Models- S1 & S1 Pro.
- The capacity of production is claimed at 1 crore units per annum.
- Has received more than 1,00,000 bookings.
- 90% localized manufacturing. Only cells are imported from Korea.
- Invested Rs. 2,400 crores to set up a mega electric scooter factory.
- Claims to create annual capacity of 1 crores vehicles.
- Entered EV battle with Chetak.
- Expect capacity to increase to 5,00,000 units.
- Forming a new subsidiary for in-house EV manufacturing.
- The company launched TVS IQube.
- Launches in 33 cities. Aims to cover all the important domestic markets till FY22.
- The company has lined up an Rs. 1,000 crore investment for EV.
- Reached capacity of 10,000 units per month previous quarter.
- Separate subsidiary to operate EV business.
- Strategic partnership with Tata Power for installation of charging infrastructure.
- Backed by Hero MotoCorp.
- First start-up to enter electric vehicles.
- Plans to expand the network to 100 cities by FY23.
- The new plant has a production capacity of 1,10,000 units per year.
- Plans to invest Rs. 635 crores to improve the business prospects.
- Market leader as it has one of the biggest product portfolios.
- Investing Rs. 700 crores to set up new factories. Increasing production to 1.3 crores units per year.
- Owns the brand name ‘Hero Electric’.
- Intends to increase dealership to 1,500 dealers this year. Currently 700 dealers.
- The company will increase capacity from the current 1,00,000 units per year to 5,00,000 units per year by Mar-22.
What Lies Ahead in this Segment?
The Electric Vehicle concept is evolving very rapidly in the market which has also led to the birth of new smart-tech start-ups to enter into this segment along with the presence of existing 2-wheeler vehicle players. Currently, as per the plans, Ola looks quite promising in this segment, but it will be interesting to watch how other players- new-age startups like Ather or existing players like Bajaj, TVS, etc. will perform in this segment.
Originally Published On: https://blog.investyadnya.in/indias-electric-2-wheeler-market/