The 2W segment can be completely electrified in the years to come, if we can overcome certain challenges.
The shift to electric mobility is driven by the need to transition to cleaner energy. The transport sector accounts for 18% of India’s total energy consumption—i.e. annual emissions of 142 million tonnes of CO2 (of which road transport shares around 123 million tonnes). Ironically, India still is amongst the lowest motorised countries in the world, and hence it has the one of the fastest growing transport sectors. Therefore, if a switch to electric mobility is not made today, the dependence on fossil fuels will keep rising and so will carbon emissions. The good news is India committed 33-35% reduced emissions intensity at COP21.This target cannot be achieved without the participation of the transport sector. While the sector has to reinvent, and support government missions and policies with unilateral consensus to meet the COP21 targets, it also needs to be practical and prudent in deciding what is achievable, so that our energies are invested in result-oriented goals.
Electric mobility—especially electric two-wheelers (e2Ws)—addresses the challenge of the rising cost of purchasing, maintaining, servicing and fuelling internal combustion engine (ICE) vehicles. Electric vehicles (EVs), over their lifecycle, are more affordable than ICE vehicles.
EVs and e2Ws do not have an engine, gears or fuel tank. Hence, vehicle manufacturers can use the space taken by these parts to come up with unique designs. EVs and e2Ws also offer better performance and superior ride experience compared to ICE vehicles, as these have lesser running parts and minimal vibration. These also offer stronger acceleration because an electric motor produces instant torque, or pulling power, unlike an ICE that needs to reach a certain RPM to reach maximum torque. EVs and e2Ws are considered safer as they are thermally cooler.
In the Indian road transport sector, a complete shift for passenger and commercial vehicles to electric mobility does not seem to be realistic, which is supported by the reluctance in adoption of EV. In the last five years, 97% of overall sales have been of conventional vehicles. However, the trend is changing as electric mobility witnessed 160% jump in registration. Today, with 17% share in EV adoption, the two-wheeler (2W) segment shows the biggest potential for growth.
The 2W segment can be completely electrified in the years to come, if we can overcome certain challenges. Two-wheelers are the biggest mobility segment in India. According to Statista, 75% of the 296 million registered vehicles were two-wheelers in 2019. The e2W segment is growing rapidly, recording 62% CAGR from FY16 to FY20. Despite the pandemic’s impact, it grew by 132% in 2021, with over 233,000 lakh e2Ws sold in the year.
The e2W segment is new and faces supply chain challenges. It needs to establish stronger relations with local and global auto parts and critical elements providers. In India, early movers have disproportionate disadvantage as they struggle to establish and streamline the value chain. Future entrants to the e2W segment will be advantaged by established supply chain and distribution network. With continuous government boost for domestic manufacturing and investing in building new critical sectors, our import dependency for EV parts will reduce gradually.
Demand creation is another challenge. Although the government is incentivising EV adoption, the public reluctance is due to misunderstanding of cost, range, charging infrastructure and performance-related issues. EV battery and vehicle technologies are advancing rapidly. As supply increases with streamlined value chain and better technologies, the cost of EVs and their batteries will decrease. At present, there are e2Ws that can deliver 200 km range on a single charge. With advancing technology, the range anxiety will get addressed.
A robust charging infrastructure is not a fundamental requirement for e2Ws. Most existing e2W owners charge at home and have a small radius in which they operate, and so range anxiety isn’t usually a concern for them.
As far as bigger bikes, such as off-roading adventure motorcycles or long-distance cruisers, are concerned, this segment is niche in India, and by the time we electrify the commuter segment there are likely to be newer technologies to cater to bigger bikes, including a much longer riding range than what is today possible. By then, even the charging network that is being developed primarily for four-wheelers would have scaled up.
With regards to the B2B segment, the three-wheeler (3W) segment has been the most electrified, accounting for 79% EV addition till date. Hence, the segment will saturate. Similar transition will be witnessed in the B2B e2W segment. The 2W fleet that operates within a particular radius for last-mile delivery can make the most by going electric.
As far as body types are concerned, while scooters are going electric, there is a minuscule penetration of entry-level electric motorcycles as well. Being an industry at its nascent stage, most manufacturers started with the relatively easier-to-develop-and-deploy option of electric scooters. With advances in R&D, the challenges in designing electric motorcycles will be addressed by knowledge and learning transfer.
Despite all these challenges, 2W has a real chance to get to 100% electrification in a short period of time. The e2W segment will undergo transformation and consolidation in the next five years, and it is the same time during which it can completely go electric.
The author is founder & CEO, Simple Energy (which has developed an electric scooter that will be launched in June).