Is India Ready For An Electric Revolution In The Two-Wheeler Industry?
Ola’s flashy entry into the e-scooter space recently has been the talk of the auto industry over the last month. The question is whether the country is ready yet for Ola and other EV makers
In July this year, Ola Electric, the electric vehicle division of the ridesharing company, hit one out of the park when it opened up bookings for its first electric scooter, the S1. Within 24 hours, the company had 100,000 bookings, despite prices not having been announced at that time. Prices were announced a month later; Rs 1 lakh for the Ola S1 and Rs 1.30 lakh for the S1 Pro, which means those bookings represent at least Rs 1,000 crore of business, and that isn’t exactly chump change. While there are many other e-scooter manufacturers in India, some of whom have been around for more than a decade, none have ever managed to drum up the kind of frenzied interest in e-mobility the way Ola has. For years, nobody cared. Now, suddenly, electric is cool, electric is stylish, and everyone wants to go electric.
Two-wheelers are big business in India; they comprise about 80 per cent of all vehicles on the road, and the market for scooters is enormous, with sales of around 60 lakh units per annum, valued at close to Rs 35,000 crore. Of this, electric scooter sales currently account for barely 1.5 lakh units per year, with ‘high-speed’ (45kph+) e-scooters making up less than 20 per cent of that number. Most scooters sold in India are relatively basic and utilitarian, with 100-125cc engines; hardly ideal for longer-distance travel but perfect for short-distance commuting in crowded cities. However, with petrol prices at around Rs 100/l, and increased awareness amongst buyers about the air pollution caused by internal combustion engines (ICE), and a push from the government for more widespread adoption of EVs, the time may be suitable for a large-scale move to electric mobility.
Another factor contributing to the eventual demise of ICE two-wheelers is the increasingly stringent emissions norms, which are, with every subsequent iteration, making it more difficult and expensive for manufacturers to produce compliant vehicles. On the other hand, the price of lithium-ion batteries used to power electric vehicles has been going down every year, with an estimated 75 per cent decline seen over the last seven to eight years. That has provided a big boost for EV manufacturers. With zero tailpipe emissions and relatively lower maintenance costs, electric scooters are now being looked upon as the ideal urban mobility solution. It also helps that e-mobility is now incredibly on trend and aspirational, and isn’t just for nerds anymore. And in the case of Ola Electric, their scooters have been designed to look very stylish and contemporary.
E-scooters aren’t exactly a recent phenomenon; these have been around in India for more than a decade now. The earliest offerings were cheap, low-quality, low-speed products sourced from no-name Chinese companies, some of which were fly-by-night operators who quickly went bust. A decade ago, there was very little interest in these oddities, which had low utility due to their very limited range and power output.
Things have been looking up over the last two or three years, with new companies entering the fray and some established players starting to develop new products that offer more range and power. Companies like Hero Electric and Okinawa are now working on improved e-scooters and, from the old guard, Bajaj and TVS have added electric scooters to their lineup. Besides Ola Electric, other standalone electric two-wheeler makers include Ather, Simple Energy, and Pure, all of which produce contemporary, high-tech electric scooters with reasonably high levels of power and performance.
Conventional scooters in India cost Rs 65-80,000, and deliver a mileage of around 40-50kpl. Running costs, in terms of fuel consumption alone, can be approximately Rs 2/km. For electric scooters with lithium-ion batteries, the initial purchase price is around Rs 1-1.25 lakh (a bit less with subsidies in some states), which is a fair bit more than one pays for an ICE scooter. However, with electricity costs calculated at Rs 6/unit, e-scooters can have running costs as low as 15-20 paise per km, which means ICE scooters can be up to 10 times or more expensive to run when compared to electric scooters. E-scooters are also quite likely to be substantially lower on maintenance costs, since EV motors have far fewer moving parts than an internal combustion engine, and generally have much higher levels of operating efficiency.
According to one McKinsey report, electric two-wheelers (including e-scooters and e-motorcycles) will see rapid growth in India over the next decade, with numbers going up to 45 lakh units per annum by 2025 and 90 lakh units by 2030, at which time they will comprise about 40 per cent of the Indian two-wheeler market. The current annual sales figure for electric two-wheelers in India stands at only 1.5 lakh units, so the McKinsey numbers sound very optimistic. On the flip side, the purchase incentives provided under the government’s FAME-II scheme (aimed at faster adoption of electric vehicles in the country), along with a rapidly expanding EV charging infrastructure, lower costs due to increased battery production in India, and changing public sensibilities, might do the trick.
Clearly, there’s a massive opportunity for electric two-wheeler manufacturers, which is why more players are jumping into the fray. The biggies, most of whom had earlier refrained from getting into the electric two-wheelers space, now want a slice of the action. TVS and Bajaj are already producing electric scooters, and Hero MotoCorp has announced plans to launch its high-end electric scooter in 2022. The latter has, in fact, set off a bit of a tussle between the Munjals; Naveen Munjal, who runs Hero Electric, doesn’t want his cousin Pawan Munjal, who runs the vastly bigger Hero MotoCorp, muscling in on his turf.
According to Naveen Munjal, as per an agreement signed back in 2010, only Hero Electric has the rights to use the ‘Hero’ brand name for electric two-wheelers. Given that the ‘Hero’ name is so deeply entrenched in two-wheeler buyers’ psyche in India, Hero MotoCorp would want to use the name for its own line of electric scooters. How this issue between the two Heros will be resolved remains to be seen. The opportunity is enormous, and neither will want to concede an inch; Naveen is pushing for India to go all-electric and end production of ICE two-wheelers by 2027, while Pawan — whose company has a tie-up with Taiwanese e-scooter company Gogoro — aims to have a best-in-class product when Hero MotorCorp’s first electric scooter is launched next year. The battle, not just between the Munjals but also between all others in the e-mobility fray, will be fierce.
For now, the leading contenders seem to be Ola Electric, with its S1 and S1 Pro e-scooters, Ather with its 450X, Bajaj with the Chetak, Simple Energy with the One, and TVS with the iQube. All these e-scooters have at least reasonably impressive specs, which allow them to work as a viable real-world alternative to ICE scooters. This means contemporary chassis, suspension and braking components, a range of anywhere between at least 75km to 235km, a zero to 40kph acceleration time of about three seconds, a top speed of anywhere between at least 75kph to 115kph and a charging time of around 5-7 hours, with AC charging at home. Some e-scooters also offer GPS navigation, full smartphone connectivity, and music playback features as part of their computer-controlled operating system. Also, the charging time with a publicly available DC fast charger would be considerably less than what homebased AC charging can offer, and DC fast chargers are gradually coming up all over the country. Of course, it takes less than a minute to fill up a full tankful of petrol for ICE scooters, and that’s one area where e-scooters can’t compete just yet.
Yes, there are still some challenges that electric scooters must overcome. The biggest of them concerns charging infrastructure. Tata Power, the most significant player in the charging business, has so far have been able to set up only around 600 public chargers across the country, and that too spread over 120 cities. Two months ago, they announced a tie-up with HPCL to set up charging stations at HP petrol pumps across the country. They are also moving aggressively to set up charging stations around workplaces, malls, hotels, housing societies, and individual homes. They have so far provided more than 5,000 home chargers across the country. Home charging would be ideal, especially for EV scooter owners, but the problem is that most people in large cities live in multi-storey buildings, so pulling a wire from a higher storey apartment to the scooter parked downstairs from a home charger is easier said than done. These are the problems that scooter makers will have to deal with if they want to increase numbers.
Also, one doesn’t yet know the demographics of the people who have rushed to book the Ola scooter despite the price being close to double that of conventional scooters. One theory is that most are probably from the affluent upper-middle class who have been taken in by the coolness factor of owning a good-looking electric scooter produced by a new-age company. They will probably be using it only for short distance errands and weekend grocery shopping. But the vast majority of scooter owners in India use it for commuting to work, travelling long distances every day. The manufacturers’ challenge would be to entice them as customers at an affordable price, while making sure that a decent charging infrastructure exists where they live.
For the moment, though, Ola Electric has raced ahead of others in the race to dominate the Indian e-scooter market. The company is setting up the world’s largest electric scooter manufacturing at Hosur in Tamil Nadu, eventually producing a vehicle every two seconds. Ola founder Bhavish Aggarwal has discussed his ambition to manufacture 10 million scooters annually, and capture 15 per cent of the world’s e-scooter market as early as 2022. But the likes of Bajaj, TVS, and Hero MotoCorp are not going to be sitting back. They have the resources and the corporate will to catch up. They know the opportunities are massive, and the old guard won’t give up without a fight. This will mean a slew of new e-scooters over the next few months and years, and a range of exciting choices for consumers. It will also signal the beginning of the end for conventional ICE scooters. RIP.