FRESH START - Rising petrol prices fuel demand for e-bikes

BATTERY-OPERATED bikes and cars are breaking free from a two-year stagnation to target vehicle users bogged down by costly fuel. Petrol prices have risen 11% in one month and electric vehicle makers, such as Electrotherm (India), TVS Motors, Hero, Mahindra & Mahindra and Ajanta, are dusting idle assembly lines along with increasing adspend. Struggling with sales and idle capacities, electric vehicle makers now hope to attract customers who earlier shied away from the noiseless, smoke-free vehicles that lacked the power and sex appeal of a petrol engine. Rising fuel prices have given a fresh lease of life to their projects.

“We want to eliminate petrol from the consumer psyche altogether,” said Avinash Bhandari, joint MD and group CEO, Electrotherm (India), that sells YoBykes. Realising the petrol pinch, the company recently changed its slogan from “No Petrol” to “Life, Fully-Charged”.

Electrotherm’s marketing spend on YoBykes will shoot 100% in 2010-11 from 7 crore, as it wants to cash in on the high fuel prices. The first homegrown e-bike brand has already experienced the fallout of petrol hike. “We expect a 200% jump in sales by March 2011 against December 2010,” Mr Bhandari said. The company would close the fiscal at 15,000 units against 33,000 units sold in 2006-07, the first year of launch. “The numbers have surely fallen but, the situation looks promising now,” he added.
Against 9 million petrol two-wheelers sold in India in 2009-10, a mere 1 lakh electric bikes were sold. “The fly-by-night operators damaged the category. Heavy dependence on China for components and frequent battery breakdowns earned the category a bad name,” says an auto consultant from Society of Indian Automobile Manufacturers.

TVS Motor Company, for instance, had to withdraw its TVS Scooty Teenz Electric from the market after a brief stay, as the batteries could not perform. However, as waves of fuel price hike hit the Indian consumer, the no-petrol bike manufacturers hope that the battery-charged vehicles will find eager takers. “Once the anticipation of petrol hike starts hurting, the consumer will come to us,” said Sohinder Gill, CEO, Hero Electric and director (corporate affairs), Society of Manufacturers of Electric Vehicles.

The operating cost of an e-bike is 0.24 per km against 1.30 per km in the case of petrol. An e-bike costs 22,000-35,000, while its battery that needs to be changed once a year costs 8,000. The category got a boost in the recent past when the Centre offered a subsidy of 4,000-5,000 (per vehicle) on all twowheeler e-bikes and 1 lakh on electric cars.

Mr Gill said the industry stands on a tipping point. “There are four lakh e-bikes on Indian roads. There will be a new growth orbit as soon as we cross 6 lakh units,” he added. E-bikes expect a 25-50% growth in two years, he added. Wallclock manufacturerturned e-bike player Oreva Group that had invested 100 crore for an Oreva E-Bike unit saw a mere 10% of the installed 15,000 units a month capacity being used in the recent past. Jaysukh Patel, Oreva MD, who had stopped spending on the brand after the category took a dip in 2007-09, seems positive now. “I am waiting to see petrol cross the 70 a litre mark for the market to take off,” he said.

While auto analyst Vaishali Jajoo at Angel Broking observed that not even 1% of the investment that goes in the Indian automotive industry comes to electric vehicles, the segment could see some momentum in future. Automotive giant Mahindra & Mahindra’s presence in the category with e-car Reva, has made the existing players believe in themselves.