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Two-wheeler companies target nine-fold increase in electric vehicles
Top Indian two-wheeler companies are ramping up new capacity to hit over six million per annum by the calendar year 2023 to meet the anticipated demand for electric vehicles
Top Indian two wheeler companies, including start-ups and legacy ICE manufacturers, are ramping up new capacity to hit over six million per annum by calendar year 2023 to meet the anticipated demand for electric vehicles.
Estimates by Goldman Sachs indicate that the current capacity is around 0.67 million which means that the six million target represents a nine-fold increase in overall capacity. This does not include the capacities which Hero MotoCorp plans to build and which TVS Motor wants to expand.
One of the biggest companies which is building new capacity is Ola Electric which is initially close to completing a two million per annum plant and plans to follow it up with an expansion to 10 million per annum (that accounts for half the total sales of two wheelers sold in the country every year).
Another is Ather Energy which plans to increase its capacity from a mere 120,000 currently to half a million by calendar year ‘22 and hit one million by the end of next year.
Bajaj Auto is also investing Rs 300 crore in an electric vehicle plant with a capacity to produce half a million two wheelers per annum while Simple Energy is investing $300 million to produce one million scooters per annum.
At the moment, only eleven electric two-wheeler companies with more than Rs 50 million plus turnover are going through a cash burn with a combined negative EBIDTA margin of 25 per cent based on ROC data for FY’21 (in some cases only FY’20 data was available).
While their total revenues are Rs 860 crore, their losses are nearly a third of that. Goldman Sachs points out that the overall EBITDA margins have been pulled down primarily because of two companies, Ather Energy and Revolt Motors, which have larger losses.
But many of these players, such as Hero Electric, Ampere, and Kinetic Green are already closer to EBIDTA break even or have reached that stage. Yet Ather Energy’s products, which are considered to be reliable and successful high speed products, have a history of cash burns initially.
Interestingly, high speed two wheelers account for over 60 per cent of all vehicles sold in the two wheeler electric vehicle space. Based on VAHAN data from January to now, Hero Electric is top of the list with 19,738 vehicles registered, followed by Okinawa with 14,869, Ola with 8,081 and Ather Energy with 5,098 vehicles.
Two wheeler players have different opinions on how quickly the market will move from ICE to electric. Ather Energy’s founder, Tarun Mehta, expects the bulk of the scooter market to move to electric in four years.
Ola Electric’s co-founder Bhavish Aggarwal holds a similar view. He predicts that all two wheelers will become electric by 2025.
A more cautious view is taken by Goldman Sachs which estimates that electric scooters still form only around 17 per cent of the total market by 2025. As for motorbikes, the percentage of electric ones will be ‘miniscule’.
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