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Riding the Electric Wave: Growth and Competition in India’s Electric Scooter Market

25 September 20246 mins read by Angel One
India's electric vehicle market is booming, driven by rising fuel prices, government incentives, and eco-conscious consumers, projected to reach $113.99 billion by 2029.
Riding the Electric Wave: Growth and Competition in India’s Electric Scooter Market
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The Indian electric scooter market has seen remarkable growth in recent years, driven by rising fuel prices, increasing environmental awareness, and government initiatives to promote electric mobility. The Indian EV market is expected to expand from US$3.21 billion in 2022 to US$113.99 billion by 2029, with a 66.52% CAGR. The country is on the path to becoming the largest EV market by 2030, with a rise in investment over the next 8-10 years.

The landscape of the Indian two-wheeler market is rapidly evolving, with electric scooters emerging as a popular alternative to traditional petrol-powered vehicles. This shift is not only helping to reduce the carbon footprint but also contributing to energy security and sustainability. 

Market Growth Drivers

  1. Government Initiatives 

The Indian government has introduced several policies to boost electric vehicle (EV) adoption, such as the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME) scheme, which offers incentives for the purchase of electric scooters.

The Indian government allocated ₹895 crore for the first phase of the FAME scheme, which operated from April 2015 to March 2019. During this phase, a demand incentive of up to ₹10,000 per kWh was offered for electric two-wheelers, with caps set at ₹18,000 to ₹22,000 for scooters and ₹35,000 for electric motorcycles.

The second phase, which ran from April 2019 and was extended until March 2024, saw a significant increase in funding to ₹11,500 crore. In this phase, the demand incentives per kWh rose to ₹15,000 for electric two-wheelers, with a cap of ₹60,000. This boost in incentives led to a notable increase in electric vehicle adoption, especially in urban areas, where electric two-wheelers became recognised as cost-effective and environmentally friendly options.

However, incentives for electric scooters are set to decrease under the PM E-Drive program, which will commence in October 2024 and continue until 2026. The initial subsidy will fall to ₹5,000 per kWh per scooter, with a cap of ₹10,000. By October 2025, this subsidy will be further reduced to ₹2,500 per kWh, with a cap of ₹5,000 per scooter.

  1. Rising Fuel Prices

With the continuous rise in petrol and diesel prices, consumers are increasingly looking for cost-effective alternatives. Electric scooters, with their lower operational costs and minimal maintenance requirements, present an attractive option for budget-conscious buyers. The savings on fuel costs significantly enhance the overall value proposition of electric scooters.

  1. Environmental Concerns 

Growing awareness of environmental issues and the need for sustainable transportation solutions have prompted consumers to consider electric scooters. 

  1. Technological Advancements

Advancements in battery technology have significantly contributed to the growth of the electric scooter market. Improvements in lithium-ion battery technology have enabled manufacturers to produce electric scooters with longer ranges, reduced charging times, and enhanced performance, making them more attractive to a wider audience. 

The EV battery market in India is projected to grow from US$ 16.77 billion in 2023 to an impressive US$ 27.70 billion by 2028. 

A report by the Confederation of Indian Industry (CII) in 2023 indicates that India will need to install over 400,000 EV chargers annually to meet the expected demand, leading to a total of approximately 1.32 million chargers by 2030. 

Hyundai Motor plans to invest US$ 2.45 billion in Tamil Nadu over the next decade to bolster its electric vehicle initiatives in India. Additionally, the company aims to assemble EV battery packs and set up 100 charging stations for electric vehicles.

Competitive Landscape

The competition in the Indian electric scooter market is intensifying, with both established players and new entrants vying for market share. Some of the key players include:

  • Hero Electric: One of the popular brands in the electric scooter segment, Hero Electric offers a comprehensive range of models catering to various consumer needs. The company is focusing on expanding its distribution network and enhancing service support.
  • Bajaj Auto: With the launch of its electric scooter, the Bajaj Chetak, Bajaj Auto aims to leverage its strong brand heritage. The Chetak has received a positive response for its retro design and advanced features.
  • Ather Energy: Ather Energy has positioned itself as a premium electric scooter manufacturer, focusing on high performance and technology. The Ather 450X, with its smart connectivity features and robust charging infrastructure, has garnered attention in urban areas.
  • Ola Electric: As a newcomer, Ola Electric has rapidly gained traction with its aggressive marketing strategy and innovative product offerings. The Ola S1 and S1 Pro have created a buzz with their stylish design, impressive range, and competitive pricing.
  • TVS Motor Company: TVS has entered the electric scooter market with the iQube, focusing on performance and practicality. The company aims to leverage its established supply chain and distribution network to compete effectively.

Conclusion

The electric scooter market in India is on an upward trajectory. With increasing competition and innovation, electric scooters are poised to become a dominant force in the Indian two-wheeler market, offering a sustainable and cost-effective transportation solution for the future.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.

 

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