Why Are Electric Scooters and Motorcycles Becoming Popular in India?
Under the Faster Adoption and Manufacturing of (Hybrid) and Electric Vehicles (FAME I) scheme implemented in 2015, the Indian government had sanctioned $130 million (INR 895 crore) to incentivize electric vehicles (EVs) in the country. Further, in 2019, the government launched the FAME II scheme with a budgetary allocation of $1.4 billion (INR 100,000 crore) for the same purpose. Under phase two of the scheme, one million electric two-wheelers will be incentivized, so that the sale of internal combustion engine (ICE) variants can be brought down.
As per P&S Intelligence, government support is set to be at the forefront of the advance of the Indian electric scooter and motorcycle market to 1,080.5 thousand unit sales and $1,043.4 million revenue by 2025. During 2020–2025, the industry will likely witness a volume CAGR of 57.9% and a value CAGR of 63.9%. The government support for EVs is so strong because they are not polluting operationally, which is imperative to bring down the air pollution level, for which Indian cities have already gained worldwide notoriety.
A key trend being witnessed in the country, related to electric two-wheelers, is their increasing sales via e-commerce websites. There are a number of startup companies offering these vehicles, and a lack of a proper distribution channel can spell doom for them. This is why, and for a lack of funds, such startups are leveraging the established sales and distribution network of e-commerce websites for selling two-wheeled clean-energy vehicles. This also benefits customers, as online shopping websites drastically increase the access to products and also offer home delivery services.
Uttar Pradesh was the largest contributor to the Indian electric scooter and motorcycle market in 2019, as the tier-2 and -3 cities of the state are generating an increasing demand for such automobiles, especially electric scooters of low speed. This is why original equipment manufacturers (OEMs) are expanding their dealership network in the state, seeing the high demand. During the forecast period, rapid market growth is expected to be witnessed in Delhi, Maharashtra, Tamil Nadu, and Karnataka, as the demand for these vehicles is rising swiftly in metropolitan and tier-2 cities.
Thus, with strong government support at the helm, the demand for electric scooters and motorcycles in India is only going to burgeon.