Electric two-wheelers: Road to a new mobility is dotted with speedbreakers

Apart from infrastructure and electricity needed to charge an electric vehicle, it is the readiness to accept a such vehicles which is said to be much lower in rural areas

India, the world’s biggest two-wheeler market by volume, must convert to the electric variant of these vehicles. After all, two-wheelers are said to account for 62 per cent of the petrol consumption in the country. One of the proponents of this change is R C Bhargava, chairman of the country’s largest carmaker, Maruti Suzuki. Since the idea behind e-mobility is to reduce the ever increasing oil import bill, he said the focus should be on switching to electric two-wheelers, which are ‘low-hanging fruits’ and where conversion is much easier. 

Sounds achievable? But it isn’t simple. One of the biggest difference between a car and a two-wheeler is that while more than three-fourth of the cars are sold in urban areas, in the case of two-wheelers, about half the sales take place in rural areas. Apart from the infrastructure and electricity required to charge an electric vehicle, it is the readiness to accept such a vehicle which is said to be much lower in rural areas as compared to urban. “Rural markets, which account for half the two-wheeler sales, would not be impacted by EVs,” said a study released by Roland Berger and ACMA early this year.

Look at these numbers: Against some 40,000-odd electric two-wheelers sold in a year, the number of petrol run variants are 20 million. Of these, two-thirds are motorcycles, where we do not even have a ready electric variant that can be adopted by the masses. Indian electric two-wheeler makers only sell scooters that can partly replace the annual scooter volume of 6-7 million units. Making a motorcycle isnt't feasible at this point as it will need a bigger battery than a scooter and the economics will simply not work.

Optimistically, even if the electric vehicle makers manage to put together a million units of e-scooters every year, that will form just five per cent of the total two-wheeler volumes. And this does not include a few hundred million petrol two-wheelers already plying on the roads.

Getting to that one-million annual mark does not look easy either. As we speak, an electric scooter costs forty per cent more than a regular one. In absolute terms, this means an electric scooter is Rs 20,000-30,000 more expensive than a petrol one. “The initial price sticker shock is too high for a buyer. At the same time, he is not seeing too many electric scooters on the roads. As an industry, if we can put out a million scooters on the roads in 10-15 major cities, it will create a positive pull,” said Sohinder Gill, chief executive officer at Hero Electric, the largest manufacturer of electric two-wheelers in the country. 

However, reaching a volume of one million units may take five-six years if no action is taken, admits Gill. He said the government and industry can together fund the gap between the petrol and electric scooters in a ratio of 50:50 just for a year to see the response it generates. But where will this money come from? Gill claims that it does not need to come from the government’s kitty and goes on to suggest a green tax of Rs 500 on the twenty million fossil fuel-run two-wheelers sold every year. That makes for a total of Rs 10 billion.

He believes that issues like range anxiety can be easily addressed if the government mandates all parking lots, offices, malls and residential complexes to have the regular charging sockets where one can charge for a fee. He also claims that electric scooters will find takers in rural and semi-urban areas, since the distance travelled is limited and petrol pumps are far. Financing is another challenge that electric two-wheelers face. Even after two years of debates around e-mobility, only two lenders -- SBI and HDFC Bank -- finance electric two-wheelers.

Roland Berger expects that just the domestic electric two-wheelers sales could reach 338,000 in 2020. In 2025, the number is forecast at 11.61 million or about one-third of total two-wheeler sales. That still means more than 22 million petrol two-wheelers may be sold in the country and the share of petrol consumption by two-wheelers may not see any visible change.