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Home >News >India >EV share in total two-wheeler volumes may rise to 10% by FY2025

New Delhi: Penetration of electric vehicles in the two-wheeler segment could increase to 10% or more of the total volumes by FY2025 on account of reducing price gap with combustion engine vehicles and increase in government subsidies, said analysts at brokerages and credit ratings firms.

To push sale of such vehicles, the Centre on Friday decided to increase the incentives by 50% on certain vehicles under the Faster Adoption and Manufacturing of Hybrid and Electric vehicle scheme.

ICRA said electric two-wheelers are likely to see 8-10% penetration, in terms of new vehicle registrations, by FY2025 and recent changes will help in achieving those targets. Introduction of new models to provide more options to customers, investment in technology and improving acceptance from financiers also remain keys for achieving faster penetration.

“The favourable amendment to the scheme has reinforced the government’s commitment and intent for India’s EV industry. In ICRA's view, ongoing investments by both start-ups and industry incumbents will also play a vital role towards India’s electrification journey," the ratings agency said in a note.

According to Shamsher Dewan, vice president and group head, ICRA Limited, the initial cost of ownership for high-speed electric two-wheelers will incrementally reduce by a minimum 10-12%, (when comparing currently available popular models) and result in a lower payback period. Prior to this, the payback period was estimated to be four years (in terms of total cost of ownership), which now stands reduced to three years.

The union government has been urging vehicle manufacturers to increase their investments in development and manufacturing of electric vehicles to reduce pollution and import of crude oil. Besides traditional manufacturers some of the electric startups like Ather Energy, OLA Electric and other startups have ambitious plans of launching their respective products in the segment.

Brokerage firm Emkay Global expects electric two-wheelers to form 5-10% of total two-wheeler sales in the medium term from just 1% at present due to reducing prices of such vehicles due to the reduction in battery costs, localization efforts and scale benefits.

“Large listed OEMs (Hero MotoCorp, Bajaj Auto and TVS Motors) are positioning themselves to benefit from the anticipated EV adoption. However, considering competition from other OEMs (Hero Electric, Ola Electric, Okinawa, Amphere, etc.), we expect some market share and margin pressures over the medium term," said analysts.

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