22 Mn two-wheelers sold in 2030 to be electric: Redseer Strategy Consultants
India is the world’s largest two-wheeler (2W) market, with an estimated 375 – 400 Mn 2Ws on the road. According to the latest report by Redseer Strategy Consultants, the electric 2W market is expected to be over 80% of the overall 2W market by 2030.
- Consumers are increasingly picking EVs understanding that the Total Cost of Ownership (TCO) is more favourable than their Petrol Counterparts, over 50% for high usage such as delivery
- Many brands and players have entered the field given a low barrier to entry through imports. As the market matures and regulations tighten, market will consolidate favouring more integrated players
- Range anxiety remains a concern for customers and charging infrastructure will be key in removing this barrier to further adoption
E2W sales volume in India is expected to reach ~22 Mn by 2030, citing the latest report on Electric Two-Wheelers (2W) landscape in India by Redseer Strategy Consultants. With the demand for affordable transportation and the focus on reducing carbon emissions, electric vehicles will play a vital role in India’s step towards a sustainable future. India is predominantly a 2W market, and as of CY2022, its overall EV penetration, including 2W, is ~3%; other developed countries are 4W-dominated markets with as high as 63% and 56% penetration in USA and China, respectively. Though the electrification of mobility in India is still at a nascent stage, there is massive headroom for growth.
According to the report, one of the critical drivers of growth is the rise of numerous brands in the E2W space, such as Ather, Ola, Hero Electric, Bajaj, TVS, Okinawa, PUREV, and Revolt. As a result, consumers have more options, pushing better adoption across price points and improving trust among the masses. As a result, E2W sales across India are on the rise, including in tier 3 and tier 4+ cities.
On the manufacturing end, simple & easy to assemble products led to the foray of several players in the E2W space. A top executive from an EV start-up commented, “The assembly process is simpler with fewer sub-components. As a result, first-time EV makers such as Ampere, Okinawa, and others have been able to introduce E2Ws into the Indian market. On the other hand, the nascency of electric two-wheeler technology doesn’t give a significant advantage to 2W majors such as Honda, Bajaj, Hero, and TVS except in distribution.” Going forward, the report claims, the consumers and regulations will reward players with technological and manufacturing sophistication, leading to a more consolidated market.
“On the consumer end, features, running costs, and price constitute the top three consideration factors for buying an electric vehicle, followed by environmental concern and performance. Although the purchasing cost of E2W is slightly higher, they win when it comes to running costs compared to their Internal Combustion Engine (ICE) counterparts,” says Aditya Agrawal, partner at Redseer Strategy Consultants. He further claimed, “As per our research, while the E2W Total Cost of Ownership for a sporadic user is only a little bit lesser, the daily commuter and heavy users save substantially over the life of the vehicle, making E2Ws the right choice for players such as food aggregators and last-mile delivery partners for whom the Total Cost of Ownership can be lower by over 50% compared to an ICE vehicle.”
Addressing the stakeholders, Aditya stated, “Although the benefits of switching to E2Ws are clear, there are many challenges to overcome, with ‘range anxiety’ being the most prevalent barrier among consumers. The range offered by most E2W on the market is much higher than the average distance travelled, which is about 25km, with 90% of the users travelling less than 50 km/day. However, a long ride is still a challenge in E2W owners’ minds. Underpenetrated charging infrastructure and longer charging times remain the biggest challenges to existing users and the most significant deterrent to those on the fence.”
“A robust charging infrastructure will become essential for long journeys as adoption increases. In addition, customers using E2W for all use cases, in general, would require fast charging stations. Thus, charging infrastructure companies will become fundamental drivers for adoption.” added Agrawal.
In the traditional 2W sales model, the dealership is responsible for marketing (BTL), customer engagement, discounts, sales & post sales services (Vehicle servicing etc.). The presence of a dealership in close vicinity ensures trust for present & potential customers. With the new sales approach adopted by many E2W brands, an Omni-channel approach with experience centers and D2C collectively will manage the complete customer journey, including test rides, purchases & servicing. Thus, providing trust and added convenience of at-home service.
Redseer report reiterates the importance of the government as the fundamental enabler for early EV adoption with FAME and PLI schemes. These schemes should continue for the next few years until E2W becomes mainstream, as there have been reduced E2W sales in geographies where state subsidies were rolled back.
The report further elaborates, The E2W ecosystem must work on ‘4As’ to achieve more than 80% electrification by 2030. These ‘4As’ are Adaptability, Awareness, Availability, and Affordability. OEMs need to develop innovations that are well-suited for the Indian environment, while the efforts to raise awareness of E2Ws are essential to increase adoption. Furthermore, omnichannel selling with D2C and experience centers must collectively guide the customer journey for a new product like EV. Finally, affordability remains the biggest challenge to most consumers. With battery costs constituting 45-50% of the total vehicle cost, advances in battery technology are crucial to encourage E2W ownership.
About Redseer Strategy Consultants:
Redseer Strategy Consultants is a leading tech and data-driven consultancy firm and a trusted advisor to new-age businesses and investors. The prominent internet and homegrown strategy consulting firm in India, the Middle East, and the South East Asian region has a global footprint with 1000+ consultants across 21 locations. The consultancy has marked its presence in the USA, Europe, Latin, and Greater China in collaboration with growth partner OC & C Strategy. The company holds almost 90% of the market share in new-age IPOs. Zomato, GoTo, Nykaa, Paytm, Cartrade, and Delhivery are some of the noted IPO engagements of Redseer. In addition, the enterprise holds over one-third market share in the new-age deal advisory and the lion’s share in the strategy consulting space.
