The world is fast embracing electric vehicles (EVs) as environment-related concerns are spreading fast, however, Indian two-wheeler manufacturers have been slow to embrace this idea.
EV industry picking up in India
The government has announced ambitious plans to make India a major auto manufacturing hub over the next five years. The development of the electric vehicle (EV) industry is an integral part of the plan.
The government has also approved a production-linked incentive (PLI) scheme worth Rs 18,000 crore for battery manufacturing. This is expected to fulfil the infrastructure gap that the EV industry is facing in India. India relies heavily on Chinese imports to meet its demand for batteries, significantly enhancing their cost.
New players stepping up
While the established two-wheeler makers have been slow in investing in EVs, new entrants like Ather Energy, Okinawa, Ola Electric and Ampere have done significant work in this area.
As per a Kotak institutional report, Ola Electric has announced an investment of Rs 2,400 crore to set up an e-scooter plant in Tamil Nadu. The plant is estimated to have an annual capacity of 20 lakh units, which can be extended to 1 crore vehicles.
Ather Energy has also increased its annual capacity from 25,000 units to more than 1 lakh units. Players like Okinawa and Ampere are also planning to increase their annual capacity over the next few years.
Established players falling behind
New entrants have chalked out aggressive growth strategies but established two-wheeler makers have been slow in pursuing the EV segment due to the premium pricing and lower penetration in the mass market.
In their absence, new players are fast gaining ground. They are also working extensively on setting up plants for batteries and other localised components that will help bring the cost of their vehicles down.
The two-wheeler industry has faced several disruptions over the last three years. It includes the implementation of BS-VI engines, a hike in third-party insurance and increasing cost of raw materials. The industry witnessed zero sales in lockdown months. Expensive fuel and inflated commodity prices have continued to add to its woes.
The way the electric vehicle industry is receiving the government’s support, the two-wheeler industry is looking all set to face a fresh disruption. In this scenario, the incumbents will fast need to find a way to stay relevant in the long term.
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