The fears of the electric two-wheeler industry seem to be holding true as the numbers posted by E2W start-ups and bigger OEMs have hinted towards a possible significant shift in the industry. Hero Electric, the biggest name in the E2W segment in India, managed to sell only 2,850 E2Ws against 13,028 EV sales in March 2022 and 6,579 E2W sales in April 2022. This is not the end of the story, as the overall 2W segment has posted growth.
Vinkesh Gulati, President, FADA, said, 'The 2W segment has seen slight improvement in overall sales when compared with April 2022. While 2W EV sales were growing rapidly though on a low base, various fire incidents across almost all EV brands has created a fear in the minds of the customers. This coupled with supply chain issues, has decreased e2W sales drastically from last month.'
Hero Electric, in numbers, sold more than 9,000 e2Ws units less than what it had sold in March 2022 and more than 3,500 units lesser than what it had sold in April 2022. The numbers are alarming for all the other OEMs as well, whether a start-up or established brands.
Dr Akshay Singhal, Founder & CEO, Log 9 Materials, told Mobility Outlook, 'The issues of fire incidents and poor quality have led to an erosion for brands. These incidents have been one of the prime reasons behind this decline. Ola Electric eating market share of other brands is also a clear reason. The sentiment for e2Ws is not good in the market at the moment.'
2W EV Sales March-April-May (2022)
|OEM/Start-up||March 2022||April 2022||May 2022|
|Total E2W Sales||42127||41957||32641|
|Total 2W Sales||11,57,681||11,94,520||12,22,994|
|Source - FADA & Vahan Dashboard|
Fire Accidents -A Reason?
This big slump in sales looks like a mix of EVs catching fire and supply chain constraints. It is worth mentioning that many EVs (from Ola Electric, Okinawa, Jeetendra and more OEMs) had caught fire end of March and the beginning of April 2022. This is also the exact time when the e2W sales began moving south.
Atul Chandel, Director, Autobei Consulting, told this publication, 'EVs are a new product for a market like India and the fire incidents are damaging the initial image of the industry. These first impressions would take a long time to be erased from the minds of the end-consumer.'
Ola Electric, which had delivered 12,702 e2Ws in April 2022, was only able to deliver 9,230 in May 2022, representing a decline of about 28% in month-on-month sales. Though the start-up is said to have a large number of pre-bookings with it, it should not go unnoticed that an electric scooter from Ola Electric had made the most of headlines after it had caught fire.
Jitendra EV, among e2W start-ups, seems to have witnessed the biggest slump in terms of percentage. Its sales declined by over 30% month-on-month as it was only able to sell 626 units of e2Ws in May 2022, compared to 1,034 it had sold in April 2022 and 915 that it had sold in March 2022. A truck full of Jitendra e2Ws caught fire last month.
Pure Electric, Ampere by Greaves and Okinawa posted negative sales as well. While Pure EV sales declined from 2,066 units in March 2022 to 1,757 units in April 2022, the numbers also witnessed a further slump to 1,466 units in May 2022. Okinawa was only able to sell 9,303 units in May 2022. It had sold 11,013 units in April 2022 and 8,284 units in March 2022. Sales of Ampere also slumped to 5,836 units in May 2022 from 6,540 units in April 2022.
Ather was the only noticeable e2W OEM registering growth. Its sales increased from 2,451 units in April 2022 to 3,328 units in May 2022. The start-up had sold 2,233 units in March 2022. Hero MotoCorp owns more than 32% of shares of Ather.
'Ather has posted good figures because it has a very good product. Given that they have been able to provide good quality, there were always good numbers on the cards for them,' shared Dr Singhal.
Chandel doesn't feel that the supply chain constraints have played a dominant role in decreasing EV sales. 'The e2W volumes in India are too low to be severely impacted by supply chain problems. Not sure about problems on Indian ports, but a lot of international suppliers I have spoken to recently are working smoothly and are able to fulfil orders of EV batteries,' he said.
Opportunity In Disguise For Established Brands
A close look at the e2W sales in India points out that start-ups in the country rule the domain. Out of a total of 32,630 e2Ws that were sold in India in May 2022, more than 20,000 came from the stables of start-ups (not counting Okinawa as a start-up). While this means that the start-ups dominate the E2W vertical, could it also be an opportunity for established OEMs like Hero, TVS and Bajaj to bounce back in their respective EV sales?
'A lot depends on the image of the brand selling a product. However, as the electric vehicle domain is new in India and Indians have just started exploring it, I doubt if the slump in sales will be a chance for bigger OEMs to bounce back,' noted Chandel. He is of the view that all the electric start-ups and established OEMs have got an equal playing field in the e2W domain.
Established OEMs, as per Chandel, are scared about their hold in the EV market, and that is one of the prime reasons they have been investing in EV start-ups. Hero MotoCorp has invested in Ather, while TVS has also invested in Ultraviolet. 'It's a fight for supremacy in the electric domain among start-ups. OEMs will take a very long time to understand this industry. That is why they are investing in start-ups,' said Chandel.
Holding Hands For A Better Future
The e2W industry, in order to bounce back, will need to work harder and smarter. Dr Singhal shared that the e2W start-ups and OEMs will have to handhold customers to make them feel confident about electric two-wheelers once again. The start-ups will have to refrain from rushing to launch products in the EV market to gain market share. The OEMs and the start-ups will also need to make sure that they do not compromise on the quality of batteries or any other components used in EVs.
'Paying attention to local conditions and testing products as per local requirements and riding behavior is the need of the hour for EV OEMs and start-ups. They also need to handhold the end consumer once the product has been sold. They will have to prove that they care even after selling the vehicles,' shared Dr Singhal.
Chandel feels that the e2W sales might drop by 20% in the short term. This decline will be much more significant if such incidents keep happening. Dr Singhal is of the view that the electric vehicle industry will grow at least 7X to 8X this fiscal compared to the last fiscal.