Electric 2-wheeler sales jump as buyers see price hike ahead
2 min read 01 Jun 2023, 11:23 PM ISTPenetration of electric two-wheelers in the segment crossed 7% in the month of May for the first time on account of this pre-buying—up 160 basis points from April, when penetration stood at 5.4%
PremiumNEW DELHI : The registration of electric two-wheelers soared 57% in May to reach one lakh units for the first time in a single month, as buyers flocked to e-bike showrooms in droves, anticipating a 15-20% price hike starting in June, and making reservations for vehicles at lower prices with a larger FAME-II subsidy.
Penetration of electric two-wheelers in the segment crossed 7% in the month of May for the first time on account of this pre-buying—up 160 basis points from April, when penetration stood at 5.4%. Total e-scooter registrations in May exceeded 1.05 lakh units, with Ola Electric at just over 27% market share, TVS Motor Co. gaining a lead at the second spot with an increased market share of 19.3% and Ather Energy being the third-largest player at 14.6% market share.
All prominent electric vehicle original equipment makers, including Ather, Ola Electric, Ampere and TVS Motor have hiked prices within the range of ₹15,000-30,000 on average from June 1. Ather Energy has also introduced a new lower-spec model of its Ather 450X, called the Ather 450s, which will begin at a significantly lower ex-showroom price of ₹1.29 lakh, which will be launched in the next few months. Ola Electric is also set to announce pricing of its new base variant, the S1 Air soon. Hero Electric has said it will keep prices unchanged even in the face of lower government subsidies, however, it does not currently receive any subsidy payout from the government for its existing models.
Mint had reported that dealers in many places were even sold out for popular models towards the end of May. Brands like Ather Energy had run extensive ad campaigns encouraging customers to buy or book vehicles at old prices before 1 June, while others like Ola Electric allowed customers to book vehicles at old prices till 30 May. “All vehicles were sold out. We saw a huge boost in sales because of the FAME-II subsidy going down. We were not promoting anything, but still found ourselves stocked out before the end of the month," Achal A Gandhi, MD, AK Gandhi Auto Pvt Ltd, a Maharashtra-based TVS Motor dealer, said.
However, Ministry of Heavy Industries’ decision to slash its FAME-II incentives on electric two-wheelers to ₹10,000 per kilowatt hour and capping subsidy at ₹22,500 is likely to lead to a dip in sales this month onwards. Further, Elara Capital anticipates EV adoption in two-wheelers to reach only 7% by financial year 2025 with the revised subsidy formula, as compared to 9% that was being projected if incentives were reduced a year later. Without government subsidies, price gap between electric scooters and their IC-engine competitors widens for the customer.
“The performance of the e-two-wheeler segment improved on the back of pre-buying in May," Jay Kale, senior vice president, Elara Capital said. “We expect this to moderate significantly in June and then gradually normalize over balance months of FY24. We believe that the industry will have to be ready to live in a world of reduced subsidies or no FAME-II subsidies. We expect industry to launch lower-specification versions of electric two-wheelers to counter price increase."
This could mean launching vehicles with smaller battery capacities in 2kWh range instead of 3kWh that’s popular now, he said. “This will slow the pace of EV penetration from earlier. Getting new lower spec models homologated and tested will take time and industry will face such teething issues."
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