Electric 2-Wheelers to clock sales of 34 lakh units by 2025: JMK Research

Since FY2016, the Indian electric two-wheeler market has grown at a CAGR of 62%. The FY2020 sales of electric two-wheelers stood at 152,000 units, which is a marginal increase of 20% over the previous year. This YOY growth for FY2020 is quite low when compared to the last two years annual growth rates, which were more than 100%. Such sudden de-growth of a sector that carries huge expectations is attributed to a policy update by the Government under FAME II, which caught the EV sector off-guard.

Under this update, only the high range battery models with 50% localization are eligible for the subsidy, making ineligible almost 90% of the existing operators for the incentives/ subsidies offered under FAME II even though the budget outlay was way higher than the FAME I scheme. The policy shift was introduced to promote ‘Make in India’ initiative and eventually make the Indian economy self-sufficient.

As per JMK Research estimates, the next year’s sales growth figures of E2W are expected to be same as those of FY2020 i.e., about 25% only. Global pandemic situation due to COVID-19, which lead to lock down first in China and then in India (Jan 2020- May 2020), would be the crucial factor behind low sales.

Assuming there is no change in the current policy scenario, the future adoption of Electric two-wheelers will mainly be driven by battery prices, which constitute over 50% of total E2W cost. After 2024, significant disruption in E2W space is anticipated, with the fall of battery prices below $100/ kWh. This price is seen as the point around which EVs will start to reach price parity with the Internal Combustion Engine (ICE) vehicles.

As per JMK Research estimates, from FY2022 onwards, with every 7-8% fall in YOY battery prices, the share of E2W’s in total two-wheeler sales is projected to double. The percentage of E2W in overall two-wheeler sales in India is predicted to increase from 0.6% (FY2020) to about 13% (FY2025) in the next five years. Thus, clocking about 34 lakh units of E2W annual sales in FY2025. As per these estimations, the CAGR of E2W sales from FY2020 to FY2025 is expected to be about 87%.

E2W market size in India

electric two wheeler market

Source: FY2016- FY2020 data taken from SMEV, projection analysis by JMK Research
Note: Total 2 wheeler sales in India from FY2021 to FY2025 are assumed to grow at a CAGR of 4%.

Click here to download our “E2W India Market Outlook Report, May 2020