Mainstream OEMs Ready to Enter in Electric Two Wheelers Territory: Report

According to a report from brokerage firm Motilal Oswal Financial Services, the competitive landscapes of the scooter segment could get changed by the entry of mainstream Original Equipment Manufacturers (OEMs) in the e-scooter territory that may disrupt the electric two-wheelers E2Ws market. 

The report stated, “It is believed that E2Ws are ready for disruption, particularly urban-focused scooters are at risk of faster electrification,” after witnessing the higher ownership cost because of regulatory factors, rising conventional fuel (petrol/diesel) prices, reduced Lithium-ion battery prices, and subsidies being offered by the Central government under the FAME II scheme plus subsidies and tax exemptions given by the state governments, together resulting in the reduction of the price gap between an internal combustion engine (ICE) driven two-wheeler and an E2W.

Along with this, the electric three-wheeler E3W segment is also seeing an expansion as it is almost at par with the CNG-run three-wheelers on a total cost of ownership basis, the report noted. 

And, it could change the competitive landscape of the Rs 340 billion scooter segment, with a market size as large as around 5.6 million units, it added.

According to the report, the two-wheeler industry saw considerable price inflation due to regulatory changes. The cost to the customer has risen by around 25 percent till January 2021 from April 2018 levels. At the same time, the cost of a lithium-ion battery continues to fall sharply, with an estimated decline of around 24 percent during the same period.

The report said that “On a TCO basis, our estimates suggest that e-scooters offer 10-20 percent lower cost of ownership (on a per km basis) as compared to ICE Scooters (both 100cc and 125cc).”

Stating that e-2Ws would be more relevant for urban markets due to the factors such as shorter driving distance, better power availability, and lesser sensitivity to TCO (total cost of ownership), it said the electrification in 2Ws is expected to take place first in the scooter segment.

“Within scooters, we expect adoption to be faster in 125cc scooter due to premium positioning, similar product attributes as EVs and lesser pricing gap. However, 100cc scooters would not be immune to electrification for too long,” the report stated.

Furthermore, the changing technological landscape could cause changes in the competitive landscape of the scooter segment, providing an opportunity for players with a weak scooter presence.

At the same time, three-3Ws are nearing an inflection point to disrupt ICE 3Ws. However, the adoption of E3Ws would also be a function of charging infrastructure, the report added.

“We are yet to see meaningful launches in E3Ws as there have been just two E3Ws (Li-ion based) launches in the marketplace from two OEMs. This segment will see more launches from other players over the next 2-4 quarters,” the report concluded. 

Not only E2Ws but, E-rikshaws in the country have also been exponentially growing as according to a recent report titled, ‘India Electric Rickshaw Market’ by Prescient & Strategic Intelligence, the Indian e-rickshaw market is expected to grow exponentially and reach a market value of USD 1,394.2 million by 2025, advancing at a CAGR of 33.3 percent during the forecast period (2020–2025). In 2019, it was at USD 786.2 million.