ICRA forecasts that the market share of electric two-wheelers will reach 6-8% in the fiscal year 2025.
Electric two-wheeler (e-2W) sales in India are approaching the one million mark, with 8.51 lakh units registered in FY2023-2024. According to Vahan data, this is a significant increase from the 7,25,297 units registered in FY2022-2023 and a substantial jump from the 2,50,219 units registered in FY2021-2022.
Despite a reduction in the FAME II subsidy in 2023, e-2W sales continued to grow. Sales dipped in June following the subsidy cut but rebounded from August, with 91,852 units registered in November. With the FAME 2 subsidy set to end on March 31, e-2W prices may rise. ICRA predicts that e-2W market penetration will reach 6-8% by FY2025.
As the FAME-II scheme concludes, the government’s announcement of incentives under a new scheme for e-2Ws and e-3Ws will provide a stable environment for e-2W manufacturers. Manufacturers will continue offering competitive products by optimizing costs by localising key components and value engineering. The long-term potential for the e-2W segment is positive, supported by a) a narrowing cost gap with internal combustion engine vehicles and b) growing consumer confidence regarding range, financing options, and vehicle attributes such as safety. Government initiatives, including the Production Linked Incentive (PLI) scheme, will encourage electric vehicle adoption. ICRA anticipates that e-2W penetration will increase to 6-8% of the overall industry by FY2025 from around 5%, as stated by Shamsher Dewan, Senior Vice President and Group Head – Corporate Ratings, ICRA.
However, a report suggests that despite the lower total cost of ownership for electric vehicles, it might not be sufficient to drive adoption. Consumers might delay their EV purchases due to risks and uncertainties, opting for internal combustion engine vehicles instead. Addressing concerns such as robust after-sales support, an adequate charging network, and access to affordable vehicle finance is essential for overcoming customer hesitations about EVs.
