Electric two-wheeler industry struggling for survival

The electric two-wheeler industry in the country is struggling for survival, as manufacturers are making huge losses. “Everybody is bleeding very heavily. Many have even shut shop,” a top industry official told Business Line.

Major manufacturers are not revealing the size of their loss in sales. Nevertheless, the fledgling e-scooter segment has failed to join the bandwagon of the Indian automobile industry, which is on a high growth trajectory. From 60 players in the electric two-wheeler business, including small time assemblers, only 10 remain in contention now.

Industry volume

The total industry volume fell 15 per cent to 85,000 units last fiscal, and even the most optimistic forecast pegs the number at the same level this fiscal, that is, if does not go further down.

This is despite the two-wheeler industry showing 62 per cent growth, for the first half of the fiscal, at 5.28 lakh units. “ Government help is not coming through the way it should be. Everywhere in the world, the electric industry has grown with Government subsidy. The industry needs firm Government support, at least in the initial years,” said Mr Sohinder Gill, Chief Executive Officer, Hero Electric.

Government support

Taking into account the huge environmental benefits of these ‘zero emission vehicles,' Japan offers 50 per cent subsidy on the purchase of electric bikes while Singapore offers 40 per cent subsidy. Countries such as the US, the UK and France offer 30 per cent subsidy.

“In India, Delhi is the only State offering subsidy for electric two-wheelers. No wonder, Delhi is the only promising market for electric vehicles,” he said. Delhi, including the subsidy on the base price and a waiver on VAT, offers 24 per cent subsidy. According to the manufacturers, the operating cost of battery-run two-wheelers is one tenth of the gasoline-powered variants. The price of electric two-wheelers in India ranges from Rs 25,000-Rs 40,000, depending on the brand and performance.

However, customer concerns on maintenance, performance and sturdiness remain a huge challenge for the industry. For instance, hundreds of complaints on electric two-wheelers are cited on the Web site of the Indian Consumer Complaints Forum, mostly about batteries and controlling systems. “Quality is still an issue,” admits Mr Gill. “Most of the key components including batteries are imported and there are customer complaints about them. Since Government incentives are not there, manufacturers are not investing in product development and quality control,” he said.

The combined investment of all electric two-wheeler players is roughly estimated to be around Rs 600 crore.

The dependence on imports for key components such as battery, motor and charger also pose a challenge for the industry. Major players such as Hero Electric and Electrotherm are looking at developing local battery manufacturing capabilities