How the Indian EV scooter market saw consolidation?

Vehicles with green registration plates are increasingly making their presence felt in the traffic, even without a sound and smoke-emitting silencer.

The sale of electric two-wheelers was at an all-time high in October. Over 75,294 electric two-wheelers rolled out of showrooms and hit the Indian roads last month.

Electric two-wheeler sales for the September quarter grew by 16 per cent over previous quarter at 162,215 units. The year-on-year growth was a massive 225 per cent, compared with the same quarter last year.

A McKinsey study projected the demand for electric two-wheelers in India to reach around 8.2 to 9.2 million units by FY30.

And after the initial frenzy, the electric two-wheeler market is staring at a consolidation. There are over 80 registered companies in this space. But, according to an analysis of VAHAN data by Business Standard, just seven companies accounted for 86 per cent of registrations of electric two-wheelers in September. E-scooters dominate this space. In June too, the share of top-seven companies in total registrations was 81%.

These seven companies were traditional internal combustion engine two-wheeler players Bajaj Auto and TVS, and electric two-wheeler makers Ola Electric, Hero Electric, Ather Energy, Okinawa and Ampere.

These companies are the only ones who recorded 1,000 registrations or more in September. About half of the total registered two-wheeler makers were not able to reach double digit registrations. According to analysts, these trends will lead to further consolidation in the industry.

Not only the new electric entrants, traditional ICE two-wheeler companies like TVS and Bajaj Auto are also making their presence felt in the electric two-wheeler market. In October, TVS Motor sold 8,103 units of TVS iQube Electric as against a meagre 395 units a year ago.

In September, Bajaj Auto and TVS Motor registered 6,488 electric two-wheelers, accounting for over 12 per cent of the total registrations. Traditional ICE companies have the advantage of a strong dealer and distribution network and can give new EV players a run for their money.

Speaking to Business Standard, Sohinder Gill, CEO, Hero Electric says, automotive business cannot be a small time play. EV two-wheeler companies with no national play might have to rethink their strategies. In two to three years, less than 10 players could be leading the pack. There is enough room for small players to still exist as a support system. 

Gill says it is high-time for traditional players to rethink their EV strategy because with 5 per cent conversion from ICE to electric, the writing on the wall is very clear that, if the incumbents don't stress on electric, they might lose big volumes.

Long road ahead for electric two-wheelers

However, there is still time to go before electric fever completely catches up with Indian consumers. For instance, even though electric two-wheeler registrations have hit an all-time high for 2022 at 68,324 vehicles in the festival month of October, which is an increase of 29 per cent over previous month, overall two-wheeler vehicles, which includes both ICE and electric have zoomed over 45 per cent in the same month.
 

Electric two-wheelers account for about 4 per cent in total two-wheeler registrations between January-October. EV companies see 4 to 5 per cent of overall two-wheeler registrations as inflection point, after which faster conversion from ICE to electric vehicles is expected. Analysts are in wait and watch mode to see if the rise of EVs in the last two months was driven purely by festive season sales.

Experts say the latest October month percentage growth of EV two-wheelers over previous month is in line with every year growth of festive season sales, but the volumes indicate that it is too early to say that it is a beginning of a hockey stick growth. However, with the inflection point of conversion at 4% touched months ago, they are cautiously optimistic.

The electric two-wheeler sector is still recovering from a spate of fire incidents and is trying to earn the faith of customers. On their part, customers are also treading with caution and choosing brands which are already established. But it doesn’t mean that small players don’t have enough room to grow in the ecosystem if they realign their strategies.