EV - 2 Wheeler Industry

Analysis
Dhananjay Jain
PART A: Industry Analysis
1. Industry Insights - Slide 5
2. Industry Size - Slide 6 & 7
3. Different Subdivision - Slide 8
4. Growth - Slide 9,10,11&12
5. Barriers to Entry - Slide 13&14
6. Challenges - Slide 15
7. Policies - Slide 16
8. Future - Slide 17&18
Industry Size
India electric two-wheeler market is anticipated to grow at a CAGR of 29.07% during the forecast period to reach
USD1,028.04 million by 2028.

Reasons that are driving this reason

● Government Initiatives and Environmental Consciousness: In recent years, a shift towards green
energy and advanced lithium-ion-based electric two-wheelers has been noticed. But despite that the
adoption rate is low due to various factors. So to increase this rate, government launched FAME II
scheme.

● Reduction in Cost of Ownership: Electric vehicles can contribute to the reduction in air pollution, carbon
emission and oil dependency in India. Due to fewer moving parts compared to ICE vehicles, electric
two-wheeler requires less maintenance service cost and overall, less running cost.
Industry Size (Cont.)

● A Shift towards Advanced Technology: In this technological era, constant innovation and technological
advancement are driving the automotive sector. Advancement in automotive technologies brings
artificial intelligence, more comfort, and advanced features such as brake assistance, anti-theft
system, reverse driving for parking assistance etc., high-capacity travel range, less charging time, less
maintenance, reduced complexity, and efficiency to the vehicle. The adoption of lithium-ion battery is
increasing as it provides more reliable features compared to lead acid battery.

● Market Segmentation: The Scooter/Moped segment majorly dominates the India Electric Two-Wheeler
Market based on vehicle type, as there are a wide range of electric scooters/moped available to customers
with less overall cost than motorcycles. Based on battery type, the Lithium-Ion battery segment dominates
the segment as they have higher effective capacity and less charging time than lead-acid batteries.
 Different Sub-Division

Riding an e-bike is a lot like riding a E-Moped is basically used by delivery Electric scooters have become a
regular bike with the added boost of companies to carry the items and symbol of modern urban transport;
an electric motor. E-bikes are great deliver them easily. they’re a common sight in big cities
for commuting to work a few miles with their eco-friendliness.
away and for running quick errands.
Growth - e-2 wheeler past sales in India
In the last five years e-two-wheeler sales have surged from about 25000 units to 143000 units in FY21
despite the Covid-19 impact. This year the number will easily cross 2 lakh units.
Growth (Cont.) - Sales of 2 Wheeler ( EV) in India

1. 2022
The sales is less than 4 mil units
right now

2. 2025
The sales will reach 5 million units

3. 2030
The sales will reach 10 million units
Growth (Cont.) - EV-ICE Sales in India mix chart - across all
categories
1. In 2021, 17.5 mil units were sold.
EV accounted for only 2% i.e.
350k units

2. In 2025, 24.5 mil units will be sold.

EV will be accounted for 9% i.e.
2.205 mil units.

3. By 2030, 33.4 mil units will be

sold. EV will be accounted for 31%
i.e. 10.354 mil units.
Growth (Cont.) - EV Sales in India - Segment wise

1. In 2021, passengers vehicles accounted for 4% of

total sales; 3W accounted for 41%; 2W accounted for
54%; commercial vehicle accounted for 1%.

2. In 2025, passengers vehicles accounted for 5% of

total sales; 3W accounted for 16%; 2W accounted for
78%; commercial vehicle accounted for 1%.

3. In 2030, passengers vehicles accounted for 5% of

total sales; 3W accounted for 5%; 2W accounted for
87%; commercial vehicle accounted for 3%.
Barriers To Entry

● Charging Infrastructure: With only 1,742 charging stations in the country, the lack of charging
infrastructure is currently one of the biggest challenges for the EV sector in India. However,
policymakers are taking steps to address this issue and provide regulatory support for setting up
charging infrastructure for EVs. The number of charging stations is likely to increase to 100,000 by
2027 to accommodate the ~1.4 million EVs expected on the roads.

● Batteries used in EVs: Most EVs use lithium-ion batteries that require metals like lithium,
magnesium, cobalt, and nickel. In FY20, India spent nearly US$865 million to import ~450 million
units of lithium-ion batteries. These batteries also have a substantial environmental impact as
extraction requires large quantities of water, is harmful to the soil, and causes air contamination.
Barriers to Entry (Cont.)

● Research & Development: India lags in R&D capability and manufacturers mostly rely on their
foreign counterparts’ technological know-how in EV components, especially in battery technology.
However, the scenario is fast changing. The Automotive Research Association of India, for
example, is among those conducting research on electric vehicle trends in India and fast-charging
technologies as per the needs of the Indian market.

● Pollution: Compared to traditional ICE vehicles, EVs are a cleaner and greener alternative and,
therefore an important part of the plan to reduce greenhouse gas emissions. However, the
manufacture and use of EVs contribute to environmental degradation. For instance, operating
the charging stations means depending primarily on polluting thermal power plants.
Challenges in EV Industry
1. EVs Range Concern - For any EV user, range of the vehicle is very important. This puts emphasis on
the battery quality and charging station infrastructure, and both of them are weak right now.

2. Cost of battery - The cost of the battery and power electronics constitute almost two-thirds of the
cost of an EV. There are many factors such as materials used in battery, gaps in the demand-supply
chain, uneconomically low volumes, etc. that lead to the high cost of manufacturing EVs.

3. Temperature issues - With the heat that battery generates, the temperature of environment also
affects its performance. In a too cold or too hot region, the battery performance degrades.

4. Lack of Skilled labour - There is still shortage of professionals who are equipped with the
knowledge and experience required in EV sector.
Policies
● Govt launched FAME I in April 2015 and FAME II in March 2019.

FAME I - Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME-India) Scheme is
launched under National Mission on Electric Mobility in 2011/ National Electric Mobility Mission Plan 2020,
unveiled in 2013.

Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME II), is a scheme launched by the
Government of India to give a boost to development of Electric Vehicles. The Government of India has allocated a
budget of Rs 10,000 crores for the second phase of this scheme.

● NEMMP was launched in 2020 to reduce the GST from 12% to 5 on EVs and from 18% to 5% on charging stations.
The National Electric Mobility Mission Plan (NEMMP) 2020 aims to achieve national fuel security by promoting
hybrid and electric vehicles in the country.

● In Union Budget 2021-22, Vehicle Scrappage Policy was passed by Shri Nitin Gadkari. The Vehicle Scrappage Policy
is a government-funded programme to scrap old and unfit vehicles and replace them with modern and new vehicles
on Indian roads.
Future
Key long-term drivers of supply and demand

● Growing aspirational middle class population - Despite the economic disruption stemming from the COVID-19
pandemic, India’s medium-to-long-term growth is expected to be steady. In fact, India’s GDP per capita is projected
to grow significantly in the next eight years, going from US $2,515 in 2022 to an estimated US $4,404 in 2030. This
growth will result in an increase in India’s aspirational middle class (gross national income [GNI] per capita of US
$1,000 to $4,000 for lower-middle-income countries), which will account for more than 40% of India’s total
population by 2030.

● Rapid Urbanization - For the next few years, EV adoption in India will largely be driven by the urban population,
before spreading to rural areas, as much of the charging infrastructure will emerge in cities before villages.

● Cost effective alternatives to ICE vehicles - The TCO for EVs over 1.5 lakh km is already low, in comparison to ICE
vehicles today. This is particularly relevant for commercial vehicles, where operating cost is the most critical factor
driving purchase. Hence, cab providers and aggregators are expected to make the switch to EVs faster than
passenger vehicles.

● Technological innovation - EVs are currently classified as battery electric vehicles (BEVs), plug-in hybrid EVs
(PHEVs), and fuel cell EVs (FCEVs). The last few years have brought significant improvements in all these
technologies, in terms of driving range and cost.
(Continue)
Final Leap

● Low distance range - The battery range of EVs currently stands at an average of 140 km for two-wheelers
and 300 km for four-wheelers, which is still quite low in comparison to their ICE counterparts, especially
given Indian road and traffic conditions.

● High on-road price - The high up-front cost of EVs also needs correction, given the value-conscious Indian
consumer. The primary reason behind the difference is the high cost of advanced Li-ion batteries.
However, with improvements in technology and scaling up of operations, costs are expected to come down.

● Inadequate service infrastructure - The lack of an after-sales service infrastructure is another constraint
to the speedy adoption of EVs in India. General maintenance of an EV is cheaper and easier because of
fewer moving parts, but service and replacement costs are much higher compared to ICEs due to two
major reasons: lack of a skilled workforce and high cost of battery replacement.