India has been witnessing tremendous EV sales growth during the last 3-4 years. The E2W segment specifically is considered to be driving this growth now, accounting for 55% of the total EV sales in FY2022, against a share of 32% in FY2021. The sales of HS E2W are now more than the sales of the electric three-wheeler (E3W) passenger segment, a trend that has witnessed a reversal since FY2022.
Over the last four fiscal years (FYs) i.e., FY2019 to FY2022, India recorded total sales of ~10 lakh units of E2W3. This includes the sales of LS and HS E2Ws, selling about 6.5 lakh and 3.5 lakh units respectively. The overall E2W segment grew at a compound annual growth rate (CAGR) of 71% over this four-year period. At the segment level, while the LS segment grew at a CAGR of 45%, the sales in the HS segment surged by more than 2x the rate of LS (115% CAGR). This trend can also be witnessed from the sales of HS-E2W during H1 FY2023 wherein HS-E2W already accounted for more than 65% of the total E2W sales.
As can be observed from figure 1 above, FY2022 has been the most significant year in terms of E2W sales in India. Further, during the first half of FY2023 (i.e., from April 2022 to September 2022), the overall E2W sales in India were about 4.6 lakh units, more than double the sales in H1 FY2022.
Internal Combustion Engine (ICE) – about E2W played a significant role in the exponential growth of HS-E2W sales, primarily over the last 1.5 years. The general 2W consumer preference has been rapidly tipping towards E2W owing to economic factors. The implementation of BS64 emission norms for all motor vehicles from 1st April 2020 mandated Internal Combustion Engine (ICE)-2W OEMs to bring significant changes in engine technology. This shift to BS6 norms led the leading mandated ICE-2W brands to hike the on-road prices of bikes and scooters by 10-15%5. This, along with the surging petrol prices, resulted in a drastic decline in the demand for ICE-2W in India. Thus, a substantial increase in the total cost of ownership (TCO) of ICE-2W became a key passive driver for the E2W sales growth.
As per JMK Estimates, the next half of FY2023 i.e., H2 FY2023, is likely to witness overall E2W sales of ~7.3 lakh units. The share of LS-E2W in the overall E2W sales is expected to decline unabatedly to reach less than 25% share by FY2027. The majority of the existing E2W manufacturers moving towards the manufacture of HS E2W and the government-bound crackdown vis-Ã -vis LS norms are some of the key
reasons for this projected evolution. The Centre, for instance, recently urged states to crack down on LS E2W manufacturers who take the go-ahead from testing agencies by complying with LS norms for their E2Ws of 30 minutes power of less than 0.25 kW and having a maximum speed of up to 25 km/hr but then flout rules by fitting the same vehicles with higher capacity batteries, offering these vehicles at the speeds of 40-50 km/hr. This poses a huge risk to the end-users. Further, the Ministry of Road, Transport, and Highways (MoRTH) has also cautioned state governments about these higher battery capacity electric vehicles that are evading checks under the garb of low-speed ones. These vehicles as per norms are not required to take type approvals, insurance, and mandatory display of number plates.
With regard to the HS-E2W segment, nearly half of the country-wide sales over the past four fiscal years (FY2019 to FY2022) have been reported across three key states Maharashtra, Karnataka, and Tamil Nadu. However, during H1 FY2023, Maharashtra recorded the highest HS-E2W sales at 53,043 units followed by Karnataka at 42,371 units and Gujarat at 32,414 units.