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According to Shriram City Union Finance CEO and MD, Y S Chakravarti, the adoption of electric two-wheelers are on the rise in rural and semi-urban areas, contrary to popular belief. This is due to subsidies that help users reduce running costs.
Despite the fact that two-wheeler sales have not yet returned to the pre-COVID levels, and that many people are putting off buying because of higher running costs and petrol prices, there is still a lot of demand from semi-urban and rural areas.
“One good thing I am seeing is that a lot of demand for electric two-wheelers is coming from rural and semi-urban areas. The perception was that EVs will be largely confined to urban centres, but a lot of the demand is also coming from rural and semi-urban areas, particularly rural because power is subsidised there,” Chakravarti said during an interaction.
He said that even though people living in these tier II or III centres prefer electric two-wheelers to ICE vehicles, it will take some time before EVs have a significant impact on vehicle numbers.
“So, unless the production capacity is increased, you won’t feel a large number out there,” Chakravarti said.
SCUF offers home loans, for a two-wheeler, commercial, and passenger vehicles. The company is currently in the process of merging with Shriram Transport Finance Company, another non-banking financial institution.
Although there were some positive signs in the sales of two-wheelers during June, overall sales are still low, he stated, noting that sales have not reached pre-pandemic levels.
He also stated that two-wheeler prices have increased by around 20% in the past 12-16 months. Additionally, the running costs of the vehicle have increased due to higher petrol prices. This is leading customers to delay purchasing vehicles.
Chakravarti stated that the electric two-wheeler peak was approximately 50,000 per month, while ICEs average 9-10 lakh. He said that there was a long period before the ICE vehicles could be a challenge.
In July, electric two-wheelers were sold at 10,000, while ICE vehicles have been sold at 3,63,000.
“So you can see the difference in sales there. Thus, for EVs to make a significant impact, the production capacity also has to go up. If production capacity goes up, we can probably see good demand.”
He spoke out about the issue of electric 2-wheelers catching on fire. The majority of EV manufacturers import parts from India and assemble them here.
“They import the battery etc… So quality control is a problem there because sourcing is a grey area,” he said.