India's e-bike market surges nearly 40%
According to media reports, India’s e-bike market adoption rate soared 39%, from 4.05% in 2022 to 5.63% in May this year.
Six other states, including Goa, Kerala, Karnataka and Maharashtra, saw adoption rates surpass the national average of 5.63%, with Goa topping the list with 17.2% adoption, according to registration data from Vahan, a website for Indian government vehicles.
The market in the top four states is growing at more than 10%, a significant increase from 1% in 2019.
India has set a target for electric vehicles (EVs) to account for 80% of its two-wheeler market by 2030.
Incentives such as tax incentives, efficient scrapping programs, reduced electricity tariffs, and expansion of charging infrastructure, subsidized by the Indian government, have been implemented to boost the industry’s growth.
Electric vehicle industry growth in India
Although EVs account for a relatively small share of total two-wheeler sales, reaching 6.98 million units by May 2023, their growth is evident.
Sales of electric two-wheelers in India rose to 846,976 units in the fiscal year 2022-2023, up two-and-a-half times from 327,900 units in the previous year, the Electric Vehicle Manufacturers Association said.
Bain & Company said in December 2022 that two- and three-wheeled transport will be the frontrunners in electric vehicle adoption, with market penetration expected to reach 40-45% by 2030.
Stead growth in India's electric two-wheeler market
The e-bike market in India has been growing steadily over the past few years. According to a market analysis report by Motor Intelligence, the e-bike market in India is expected to grow at a CAGR of 9.94%.
According to SIAM, two-wheeler sales in FY2021 were 13.46 million units. Among them, OKINAWA, which ranked first, accounted for more than 30% with 4.64 million units, while HMSI ranked second with 3.46 million units.
The two-wheeler market sentiment in India continued to rise in 2022, with cumulative total sales from April 2022 to February 2023 reaching a record 14.57 million units.
The market is expected to grow at a CAGR of 9.9% in 2021, according to SIAM.
The growth of the electric two-wheeler market in India cannot be separated from the encouragement and support of the government.
In April 2015, the Ministry of Heavy Industries (MoHI) and the Society of Indian Automobile Manufacturers (SIAM) jointly implemented the Faster Adoption and Manufacturing of Electric Vehicles (FAME) program.
FAME Phase II supports the entry into the market of about 7,000 electric buses, 500,000 electric three-wheelers, 55,000 electric four-wheelers and 1 million electric two-wheelers through subsidies.
FAME Phase II also includes infrastructure, with 2,877 charging stations being built in 68 locations at a cost of Rs.5 billion in India.
The Indian government has high expectations of the industry.
Reports have suggested that India hopes to increase its manufacturing capacity to more than 30 million units by 2026, which is more than double the country’s highest annual two-wheeler sales to date, but is clearly too much for market demand.
The growth potential of the Indian market has attracted Honda’s Indian subsidiary Honda Motorcycle & Scooter India, which announced on March 29 that it will launch electric two-wheelers in India in 2023, and plans to increase its annual production of electric two-wheelers in India to 1 million units by 2030, with production starting around March 2024.
Honda will produce electric two-wheelers at its plant in the southern Indian state of Karnataka, starting with two models, with specific pricing and other details not announced.
Honda will also support HMSI’s battery replacement program for electric two-wheelers in cooperation with Honda Power Pack Energy India, a group company that conducts on-board battery replacement business in India.
The Indian market has huge growth potential, but there are a number of challenges such as lack of charging infrastructure, high costs, limited range of e-bikes, lack of consumer awareness, etc., which need to be addressed by the government and manufacturers.
The government’s commitment to promoting green transportation and sustainable energy solutions in India was highlighted in the government’s budget announcement for 2023.
In addition to tax exemptions on capital goods related to electric vehicle batteries, such as electric bike batteries, the government has allocated Rs. 1970 crore to the National Green Hydrogen Mission with a goal of achieving annual green hydrogen production of 5 MMT by 2030.
And so far, even with steady growth, the Indian market still has a long way to go.
4 Indian market issues investors must focus on
The e-bike market in India has grown steadily over the past few years, with people becoming more aware of the environmental benefits of electric vehicles and the rising cost of gasoline.
According to a market analysis report by Motor Intelligence, the country’s e-bike market is expected to register a CAGR of 9.94%.
Further reports indicate that the electric two-wheeler industry has ambitious plans to increase its manufacturing capacity to more than 30 million units per year by 2026, a 50 % increase in India’s highest annual two-wheeler sales to date.
The e-bike market in India is facing significant challenges despite the current government’s efforts to promote electric vehicles.
Lack of charging facilities
One of the biggest challenges facing the Indian e-bike market is the lack of charging infrastructure.
Unlike gas stations, charging stations are not common across the country.
This means that e-bike owners have limited charging options. According to a report by IVCA-EY, there are a total of 1,742 charging stations in India.
In addition to infrastructure challenges, e-bikes take longer to charge than gasoline-powered vehicles, which can be a deterrent for potential buyers.
To address this issue, the Indian government has launched the FAME (Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicles) program, which aims to create a robust charging infrastructure across the country.
The program provides financial assistance to individuals and organizations for the purchase of electric vehicles and the installation of charging stations.
High cost of e-bikes
Another challenge facing the Indian e-bike market is the high cost of e-bikes compared to petrol bikes (motorcycles).
While the operating cost of an e-bike is lower than that of a gasoline bike, the upfront cost of purchasing an e-bike is much higher.
This could deter potential buyers, especially in price-sensitive markets like India.
To address this issue, the Indian government has launched several initiatives, including the FAME program and a reduction in GST (Goods and Services Tax) on e-bikes, to make e-bikes more affordable for the general public.
Finance Minister Nirmala Sitharaman said the Indian government is taking steps to promote cleaner transportation.
One such measure is the exemption of capital goods and machinery required for the production of lithium-ion batteries used in electric vehicle batteries.
This step is intended to encourage the adoption of cleaner transport alternatives.
The tariff on lithium-ion batteries has been reduced from 21% to 13%.
These initiatives are expected to accelerate the growth of India’s electric vehicle industry and support the country’s transition to a low-carbon economy.
This will drive the adoption of electric vehicles in the country.
In addition, some e-bike manufacturers have started offering financing options to make their products more accessible to customers.
E-bike range issues
Another challenge facing the Indian e-bike market is the limited range of e-bikes.
Most e-bikes currently available on the market have a range of about 60 – 70 kilometers on a single charge, which may not be enough for long distance travel.
This can deter potential buyers, especially those who have to commute to work by bike on a daily basis. So choose the best electric commuter bike is a tough one.
While the limited range of e-bikes is one of the challenges facing the adoption of e-mobility, a number of steps are being taken to address this issue.
The development of fast charging infrastructure, advances in battery technology and regenerative braking systems will play a crucial role in increasing the range of e-bikes and accelerating their popularity.
In addition, the centre can provide incentives for research and development in this area to encourage innovation.
Only 31% of Indians are aware of e-bikes
According to a YouGov survey, only 31% of Indians are aware of e-bikes. This lack of awareness makes it difficult for companies to market their products and reach potential customers.
To address this issue, the Indian government can launch awareness campaigns to make consumers aware of the benefits of e-bikes.
Electric bike manufacturer can also play a role by providing more information about their products and the benefits they offer.
The challenges facing the Indian e-bike market are huge, but the segment also has tremendous growth potential.
With the right policies and initiatives, India can become a leader in the global e-bike market.
Governments of Indian companies, e-bike manufacturers and other stakeholders need to work together to address the challenges and pave the way for a brighter future for e-bikes in India.
To address these challenges, the government’s commitment to promoting green transportation and sustainable energy solutions was highlighted in the government’s budget announcement for 2023.
In addition to tax exemptions on capital goods related to electric vehicle batteries, the government has also allocated Rs 19.70 crore for the National Green Hydrogen Mission (NGHM), which aims to achieve an annual production of 5 million tons of green hydrogen by 2030.
This initiative will provide crucial support to India’s electric vehicle industry and help the country transition to a low-carbon economy and reach its net zero target by 2070.
In addition, Gobardhan plans to invest Rs 100 crore to support the growth of biogas, which includes setting up 200 compressed biogas plants and 300 cluster plants.
The implementation of these measures is expected to accelerate the adoption of cleaner transportation options and help India thrive in the electric vehicle market.
India, like China, is a large country with a large population, also facing the problem of environmental pollution, because energy upgrading is imminent, coupled with the entire market being in the embryonic stage, its market has only huge development space.
However, facing these problems, is the reality that all investors can’t avoid, so if you want to invest and enter the Indian market, you need to be prepared accordingly!