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Two and three-wheelers to power electric vehicles revolution 

Growth in these segments will take place despite the stringent rules imposed under FAME II

Published: 14th February 2020 09:47 AM  |   Last Updated: 14th February 2020 09:47 AM   |  A+A-

India is behind on the key global growth drivers for EV sales

India is behind on the key global growth drivers for EV sales

By Express News Service

Adaptation of electric mobility in India will be more robust in the two-wheeler and three-wheeler segments, while share of electric vehicles (EVs) in the four-wheeler space is expected to remain low in the next five years, according to a report by CRISIL Research. The report estimates that electric two-and three-wheelers, which already enjoy better cost economics compared to their internal combustion engine (ICE) counterparts, will continue to zoom ahead and by FY2024, the EV penetration is expected to improve by 12-17 per cent of new vehicle sales for electric-two-wheelers and a whopping 43-48 per cent for electric-autos. 

The growth of EVs in these segments will take place despite the stringent rules imposed under FAME II and the removal of subsidies on lead acid-powered electric-two-wheelers. It added that offtake of passenger cars for personal mobility will be subdued given poor cost economics and the lack of demand incentives under FAME II, though cab fleets will move up a gear. The top five electric-two-wheelers in India, according to the report, are expected to increase their capacity from 0.4 million units in fiscal 2020 to over 3 million units by fiscal 2024. At present, the segment is mainly dominated by new-age players, with Hero Electric having maximum market share. It is only very recently that big players such as TVS and Bajaj Auto have forayed into e-mobility.

Meanwhile, the incumbent original equipment manufacturers (OEMs) are launching e-autos at a rapid pace and e-rickshaws are not only replacing cycle rickshaws but could also emerge as a low-cost alternative to e-autos as e-rickshaw costs 30 per cent lower than e-auto, the report said. Ayush Lohia, CEO, Lohia Auto Industries, one of the leading electric-three wheeler players, said, electric three-wheelers have been the torchbearers in the impending revolution in the sector and shall be a key driver for mass adoption of EV in India. “Lohia Auto aspires to play an integral role in leading the country in the adoption of EVs as a more sustainable, eco-friendly and economical choice for mobility.” While cost-effectiveness will drive adaptation of EVs, India’s journey ahead is full of challenges. CRISIL said the enabling ecosystem, so critical for the successful adoption of EVs in India, is not quite in place yet, while vehicle manufacturers have been slow to provide the supply-side push too.

India is behind on the key global growth drivers for EV sales: battery prices and manufacturing, demand incentives and the charging infrastructure. Unlike countries that manufacture lithium-ion batteries and, hence enjoy a cost advantage, battery prices in India continue to be at a premium. “Hence, despite demand incentives, the cost of acquisition and operations of EVs will remain unfavorable for many vehicle categories, thereby constraining demand for the next five years,” it said. The constraints on the supply side are that OEMs are still grappling with a chicken-and-egg conundrum: will battery capacity come up at scale first and help reduce EV costs, or will EV volumes have to grow first.



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