Last mile deliveries, food aggregators to drive E2W growth says Redseer

• Ownership of electric 2-wheelers can result in cost savings to the tune of 20-70% says a Red Seer report.
  
• Battery performance, charging times, and range are challenges to adoption.
  
• The government has been the fundamental enabler for the early adoption of EVs with FAME and PLI schemes.
  

Electric 2-wheelers are set to grow at a rapid pace in India, thanks to their popularity among B2B players such as food aggregators, and last mile delivery services, according to a report by Redseer Strategy Consultants. Low cost of ownership is also a reason for B2B players to shift to electric vehicles.

India is the largest two wheeler market in the world with an estimated 375-400 million two wheelers on the road. Since affordability is the biggest driver of 2-wheeler sales among customers, savings that are brought about by ownership of 2-wheelers are expected to drive growth. According to the report, ownership of electric 2-wheelers can result in anything from 20-70% in cost savings.

Going local

Given the relatively lower barriers to entry, the electric two wheeler market has seen hundreds of new players. Most of these players are ‘assemblers’ who import a significant portion of their components and even technology from China and other countries.

Given the government’s push for indigenization and original equipment manufacturers or OEMs’ own need to protect from supply shocks, there is room to go for growth in localization too.

The report also indicates that consumers will also reward the more integrated and sophisticated players. Not only will such OEMs be able to provide a more cost-effective product but also offer a superior experience that builds on in-house capabilities to improve and innovate, as per Red Seer.

According to the PWC report, ‘Winning the EV race through localisation: An India perspective’, the regulatory push has helped initiate the journey towards EV localisation. This is especially true with electric 2-wheelers and manufacturers focusing on localisation to claim Faster Adoption and Manufacturing of Electric Vehicles (FAME)II benefits which provides a 40% subsidy to EV makers on the cost of the vehicles.

Yet, there are challenges. Battery performance, charging times, and range remain the primary challenge for both existing electric 2-wheeler users and prospective buyers.

While the range of most electric 2-wheelers exceeds the average distance travelled by over 90% of their consumers, ‘range anxiety’ still remains, Red Seer says.

Reliable charging infrastructure is needed to build user confidence on electric 2-wheelers as a fully viable mode of transport. “Recent buyers of internal combustion engine (ICE) 2-wheelers have indicated that they will buy an electric 2-wheeler next time if more charging stations and fast charging are ubiquitous,” says Red Seer.

The 4A’s: adaptability, awareness, availability, and affordability is a complete approach to persuade consumers to switch to electric 2-wheelers in the coming years.

It’s however essential to add that the government has been the fundamental enabler for the early adoption of EVs with FAME and Production-Linked Incentive (PLI) schemes.

The Red Seer report says that it’s crucial that the government continues incentivizing the switch to electric 2-wheelers to encourage consumers.

SEE ALSO:
Sensex, Nifty50 end lower due to sell off in metals, IT stocks
Adani Transmission reports 78% rise in Q3 net profit to ₹475 crore on one-time income