India’s Electric 2-Wheeler Market To Surge, Industrialists’ Estimates Varies

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Despite the pandemic, electric scooters sales have doubled to over 2.3 lakh units in 2021 and the growth this year is expected to be even more dramatic. The era of electric mobility rewrites the laws of the local automotive sector, which is worth USD120 billion and offers a once-in-a-lifetime chance for new entrants. 

Startups have proliferated, equipped with the notion that they would alter the sector. They have the backing of venture investors looking for the next great disruptor.

By 2026, the total capacity for electric two-wheelers is estimated to approach 30 million units per year. It is a startling figure, over 50% more than India’s top-selling of 21.2 million two-wheelers in fiscal 2018-19.

Ashim Sharma, Partner and Group Head, Nomura Research Institute, says that the announcements of increasing electric-two-wheelers capacity certainly add up to a lot more than the projected demand.

Electrification of transportation is here and befalling right now. The need is undeniably there, and it will only increase in the coming years, which is driving up the values of firms in this sector. This has enticed more entrepreneurs into the fray.

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“The market is large—nearly 2 crore (20 million) two-wheelers are sold in the country, which will increase to 4 crores (40 million) in 3-4 years,” says Vivekananda Hallekere, CEO and co-founder of Bounce. 

Hallekere believes that in the coming five years, 90-95% of this 40-million market will be electric.

According to Gupta of IHS, it is simple to understand the huge investor interest in EV firms in India because government authorities have explicitly said that decarbonization would be at the centre of the economy in the future across industries including automotive.

It all comes down to speculating on the size of the market for electric two-wheelers at the turn of the decade. And there is a complete lack of agreement on that, with varied estimations.

Motilal Oswal is the most cautious, expecting just 15% of the market to be electrified by fiscal 2027. According to Thakkar of Crisil, Bhatia of JATO, and Sharma of Nomura, it will account for around one-third of the global market by 2030.

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For the same time frame, Phokela of Ather predicts that half of the scooter market will be electric, while Suhas Rajkumar of Simple Energy predicts that by 2030, at least 70% of the market will be electric. 

At the same time, it is unclear if the supply chain is fully prepared for the expected sharp increase in sales. Unlike the OEMs, few auxiliary units have declared growth to keep up. 

Furthermore, for a significant degree of market penetration, organizations would require a very broad sales and service network, which is now missing and will take years to establish.

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