Mumbai: Electric two-wheeler sales in the country are expected to grow to around 22 million by 2030 amid a demand for affordable transportation and the focus on reducing carbon emissions, said a report on Tuesday. A predominantly two-wheeler market, India's overall EV penetration, including two-wheeler stood at around three percent of the total automobile sales in 2022 calendar year.
Most developed countries are four-wheeler-dominated markets with as high as 63 percent and 56 percent penetration, in the US and China, respectively, said Redseer Strategy Consultants in its report that released on Tuesday. It noted that though the electrification of mobility in India is still at a nascent stage, there is a massive headroom for growth.
Consumers are increasingly picking EVs understanding that the Total Cost of Ownership (TCO) is more favourable than their petrol counterparts; it said and added that many brands and players have entered the field given a low barrier to entry through imports.
"As the market matures and regulations tighten, the market will consolidate, favouring more integrated players even as range anxiety remains a concern for customers and charging infrastructure will be key in removing this barrier to further adoption," Redseer said.
One of the critical drivers of growth is the rise of numerous brands in the E2W space which has led to consumers having more options, pushing better adoption across price points, among others, as per the report. "As a result, E2W sales across India are on the rise, including in Tier 3 and Tier 4-plus cities," it stated.
"On the consumer end, features, running costs, and price constitute the top three consideration factors for buying an electric vehicle, followed by environmental concern and performance. Although the purchasing cost of E2W is slightly higher, they win when it comes to running costs compared to their Internal Combustion Engine (ICE) counterparts," said Aditya Agrawal, partner at Redseer Strategy Consultants.
Although, the benefits of switching to E2Ws are clear, there are many challenges to overcome, with 'range anxiety' being the most prevalent barrier among consumers, said Agrawal. "A robust charging infrastructure will become essential for long journeys as adoption increases. In addition, customers using E2W for all use cases, in general, would require fast charging stations. Thus, charging infrastructure companies will become fundamental drivers for adoption," he added.
In the report, Redseer reiterated the importance of the government as the fundamental enabler for early EV adoption with FAME and PLI schemes.
These schemes should continue for the next few years until E2W becomes mainstream, as there have been reduced E2W sales in geographies where state subsidies were rolled back, it noted. It also said that the E2W ecosystem must work on 4As including, adaptability, awareness, availability, and affordability to achieve more than 80 percent electrification by 2030.