Sales of electric two-wheelers are expected to grow 24 times their current volumes in India by the year 2030, according to a report by venture capital fund Blume. E-two wheeler sales are likely to touch 17.69 million units over the next eight years, up from a projected volume of 0.75 million this year. This would make the Indian e-two wheeler market worth $20.6 billion in new sales by the end of the decade, as a number of start-ups & established OEMs in the space look to grab a piece of the EV pie in the country.
The report also estimates electric car sales to nearly 500,000 units annually by 2030, while electric-three wheeler sales are likely to cross 400,000 units in sales, a multi-fold jump from an estimated sale of just over 25,000 vehicles this year in both the segments.
While electric two-wheelers currently are at parity with or cheaper than their internal combustion-engine (ICE) counterparts from a total cost of ownership (TCO) point of view thanks to the central government’s FAME-II subsidy and incentives offered by various state governments, Blume expects e-2 wheelers to become more affordable than gasoline-powered vehicles by 2025 without the support of any government subsidies. However, it may take longer for electric passenger cars to gain this cost advantage without government subsidies. With a rationalisation of battery prices, EVs can become more affordable than ICE variants by 2028-29, the report said.
The study on India’s EV ecosystem notes that while energy costs account for the bulk of the cost of running a traditional vehicle, the upfront cost of the vehicle is the largest cost component in the case of an EV, making it a more viable option in the long term. The report says that EV prices across categories are seen to drop by 2x every decade.
According to the report, a key ‘cold-start’ risk to EV-adoption is the lack of readily available financing. The “ability to underwrite the battery risk is the toughest given the secondary market for EV batteries is yet to be established, and all other components have existed for over 100 years”, it notes, highlighting that financiers have also been unable to correctly gauge and quantify the risk of underwriting an EV because not enough of these vehicles have been sold in the market yet to create a secondary market to serve as a source of reliable data for financiers.
As a result, interest rates to secure loans for EVs are often higher than a comparable ICE vehicle, which acts as a barrier for entry for many individuals. The report also emphasizes that determining the true value of a battery (salvage value) requires financiers to become increasingly tech-enabled.
