Home / Markets / Mark To Market /  Electric two-wheeler demand intact despite fire incidents
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Recent incidents of electric two-wheelers catching fire may have added to consumers' anxiety about owning one such vehicle, but this has not considerably impacted demand. 

True, the share of electric two-wheeler (2W) in the 2W segment dipped to 3.2% in May from 4.1% in April, but this has rebounded to 3.5% in June so far, according to Vahan registrations. One factor which could have slowed down this penetration could be supply chain disruptions.

“Conversations on our electric vehicle (EV) tour in June suggest that the fire incidents have resulted in higher customer queries on safety but have not impacted demand much," said analysts at Jefferies India in a report on 22 June.

The new entrants in this segment hold a significant market share whereas the incumbents are yet to expand their presence. For perspective, the market share of Ola Electric, Ampere and Okinawa stood at 23%, 14% and 22% respectively in the June quarter-to-date (Q1FY23). On the other hand, Bajaj Auto and TVS Motor Co.’s market share was 3.5% and 2.4% respectively in the same period.

Also, there is no dearth of funds for e-2W startups. Analysts at Jefferies estimate new e-2Ws to have cumulatively raised about $1.7 billion in capital so far with Ola Electric, Ather Energy, and Ampere constituting roughly 75% of the capital.

“We believe access to capital is crucial for new original equipment manufacturers’ to expand capacities and product portfolios, but funding is likely to be concentrated at a few leading OEMs with higher capital market focus on vehicle safety and in-house capabilities," added the Jefferies report.

The electric three-wheeler (e-3W) segment is also seeing increased momentum and the government’s thrust for electrification would further aid demand.

“Our conversations with MoEVing, an EV ecosystem startup for intra-city logistics, suggest that the total cost of ownership (TCO) is turning attractive for e-3Ws over internal combustion engines," said the Jefferies report. Assuming an eight-year vehicle usage, MoEVing estimates TCO of an e-3W including subsidy benefits is about 42% and 25% lower than diesel and CNG (compressed natural gas) three-wheeler respectively, they added.

Note that the listed automakers do not have an e-3W product yet and Bajaj Auto and TVS are gearing up to launch the same.

As such, it remains to be seen if the incumbents capture market share with their respective EVs. More significantly, product quality would be keenly monitored.

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