India Will Be An Uphill Battle For E-Bike Makers
Currently, the share of e-motorcycles in the overall motorcycle market is less than 1% and the space is dominated by startups.
Electric two-wheeler manufacturer Ola Electric went public last month. Soon after, the market leader launched its first e-motorcycle series, becoming the first major EV player to venture into the segment.
This month, its rival Ather Energy filed for an initial public offering. In its draft red herring prospectus, Ather indicated that it planned to use some of the capital raised to back the electrification of motorcycles. It is also anticipated that incumbent players like Bajaj, TVS and Honda, which are already pretty big in the internal combustion engine (ICE) motorcycle market, may follow suit.
Currently, the share of e-motorcycles in the overall motorcycle market is less than 1%. The space is dominated by startups. However, more mainstream EV players are looking at the segment, which is decidedly more popular in India.
According to various industry estimates, e-motorcycle penetration might grow to anywhere between 8-12% by FY2030, significantly lower than the 70% penetration expected for electric scooters in the same period. The Indian two-wheeler market is seeing a growing shift towards scooters over bikes. Not to mention e-bikes are significantly costlier than their ICE counterparts. Despite increasing mainstream interest in the segment, e-bike makers face an uphill battle in capturing bike users’ interest.
Electric two-wheeler manufacturer Ola Electric went public last month. Soon after, the market leader launched its first e-motorcycle series, becoming the first major EV player to venture into the segment.
This month, its rival Ather Energy filed for an initial public offering. In its draft red herring prospectus, Ather indicated that it planned to use some of the capital raised to back the electrification of motorcycles. It is also anticipated that incumbent players like Bajaj, TVS and Honda, which are already pretty big in the internal combustion engine (ICE) motorcycle market, may follow suit.
Currently, the share of e-motorcycles in the overall motorcycle market is less than 1%. The space is dominated by startups. However, more mainstream EV players are looking at the segment, which is decidedly more popular in India.
According to various industry estimates, e-motorcycle penetration might grow to anywhere between 8-12% by FY2030, significantly lower than the 70% penetration expected for electric scooters in the same period. The Indian two-wheeler market is seeing a growing shift towards scooters over bikes. Not to mention e-bikes are significantly costlier than their ICE counterparts. Despite increasing mainstream interest in the segment, e-bike makers face an uphill battle in capturing bike users’ interest.
Is It A Promising Segment?
Several start-ups have ventured into the e-motorcycle space in the last four years, but it remains a niche segment. Most e-bikes cost anywhere between Rs 1 lakh to Rs 3.5 lakh — significantly more expensive than the average ICE bikes sold in the country.
Players like Revolt Motors, Matter Electric, Orxa Energies, Ultraviolette, and Tork Motors have been in the market. Of these, most have not managed to make a significant dent yet. Revolt Motors is the only mass-market player with over 800 units per month. In FY24, it sold 7,342 units and had a 1% market share in the overall EV two-wheeler market.
Revolt’s sales however fell for a second consecutive year – from 12,932 units in FY23. Other manufacturers are struggling too. Tork Motors has not dispatched any new vehicles to its dealers since December last year, and is now considering a stake sale amid a funding crunch.
However, this fledgling market does provide an opportunity for a well-established player to swoop in and gain early advantage. HSBC Securities, in their report on the Ola Electric IPO, estimated that the OEM would sell 5000 motorcycles a month in FY26, and scale up to 80,000 units by FY30. “We think being an established brand and early mover in motorcycles, Ola should be able to maintain its 40-50% market share in the electric motorcycle segment,” the report said.
Bain India projects e-motorcycle penetration to reach 30% of the overall motorcycle market by FY30 on the back of anticipated new launches. However others, like credit ratings agency CRISIL project it at a modest 8-10% for the same duration.
Does It Have Takers?
Bikes have dominated Indian streets over scooters ever since Hero Honda’s entry-level marvel, the Hero Splendor was launched in 1994. Currently, the Indian two-wheeler market consists of about 60% bikes, 30-35% scooters and the rest are mopeds.
One would assume that a similar demand for bikes would arise for e-motorcycles, but that isn’t the case. The reason ICE bikes are so popular in India is that most entry-level models are cheaper and offer a better range than scooters. They are the perfect scrappy, hyper-local mode of transport for rural and urban budget commuters.
It would be hard for e-motorcycles to match that range as well as price. Ola Electric’s Roadster series has tried to match the pricing of its ICE counterparts, starting at Rs 75,000 but it has already invited some speculation and criticism over the low pricing.
No Product Differentiation
For erstwhile motorcycles and scooters, there was still a lot of differentiation in terms of what both offered in terms of usability or applicability, Hemal Thakkar, senior practice leader and director at CRISIL told The Core. “But when we look at a motorcycle versus a scooter which [are] driven by an electric powertrain, the battery and motor defines everything, which will be very similar whether it's a scooter or a motorcycle in a way,” he said. “So the experience that the customer may get from a motorcycle versus a scooter may not be a huge difference,” he added.
There aren’t enough models in the market that have provided a significant differentiation or “proved their mettle” as Thakkar puts it.
Unless there are a significant number of new models offering something to the user that an e-scooter or an ICE bike does not, the segment may struggle.
Scooterisation
A second significant point to consider is that the share of scooters is rising in India. There are several factors for this, including the increasing number of women riders who prefer scooters over bikes, a rise in gig work and the penetration of e-scooters.
In Q1 of FY24, the share of motorcycles in the Indian market was 65%. This came down to 59% by the second quarter, and the share of scooters rose to 41% in that period.
CRISIL forecasts the share of scooter sales to surpass 40% by FY31 in the overall market. Within this segment, EV penetration will increase too, Thakkar pointed out.
The e-scooter industry has taken about 4-5 years to reach a penetration of over 5% in India. The industry has faced several teething issues, which are still being resolved. There may be a similar learning curve for e-motorcycles as well.
