Electric scooter makers slash prices aggressively to grab EV market share

Ola Electric, led by Bhavish Aggarwal, slashed prices by up to Rs 25,000 on its S1 Pro, S1 Air, and S1X+ models, leading to a surge in bookings

In a bid to capture a larger share of the burgeoning electric vehicle (EV) market, several Electric Two-Wheeler (E2W) manufacturers have announced substantial price reductions on their models, intensifying competition with traditional petrol-driven scooters, which run on Internal Combustion (IC) Engines.

In recent months several prominent players in the two-wheeler segment have joined this trend, including Ola Electric, Ather Energy, Okaya EV, and Bajaj Auto-owned Chetak Technology. Ola Electric, led by Bhavish Aggarwal, slashed prices by up to Rs 25,000 on its S1 Pro, S1 Air, and S1X+ models, leading to a surge in bookings. Similarly, Ather Energy reduced the price of its 450S model by Rs 20,000, while Bajaj Auto’s Chetak scooter is now available at more competitive price points.

Despite the rapid growth witnessed by the E2W sector, with sales surging by 26 percent to 81,608 units in January compared to the same month last year, electric scooters still constitute only a fraction of sales, accounting for 4.5 percent of the overall two-wheeler market.

Among the significant hurdles faced by the EV industry are concerns regarding range anxiety, relatively higher acquisition costs compared to petrol-powered vehicles, and inadequate charging infrastructure. However, in response to these challenges, some EV manufacturers have undertaken significant price cuts on their entry-level products, ranging from 15-17 percent.

Factors behind the reduction

The price reductions, according to industry observers, can be  attributed to various factors, such as falling battery costs, cost optimization strategies, increased localisation, and vertically integrated in-house technology.

However, questions linger over the sustainability of such aggressive pricing strategies, with profitability remaining a distant goal for E2W manufacturers.

Industry experts suggest that the recent pricing actions are likely to drive up volumes, enabling better absorption of fixed costs and giving manufacturers negotiating leverage with vendors.

Additionally, sustained government subsidies, reductions in battery prices, and enhanced localisation efforts are expected to contribute to the long-term viability of the EV sector.

Still very pricey

While the reduction in prices has narrowed the gap between electric and petrol-driven scooters from over 80 percent to around 60 percent, significant disparities still exist. Despite the increased affordability of E2Ws, well-established petrol scooter models such as Honda Activa, Suzuki Access and TVS Jupiter continue to dominate sales charts.

Industry observers anticipate only a marginal impact on petrol scooter sales due to evolving consumer preferences and the multifaceted nature of purchasing decisions.

While pricing plays a crucial role, factors such as charging infrastructure, vehicle performance, and the overall ecosystem also influence consumer choices in the EV segment.

Tata cuts EV car prices

In the Electric Four-Wheeler (E4W) space, Tata  Motors has slashed prices for two of its cars by up to Rs 1.2 lakh, which is the first such cut by a carmaker in India.

The price of the Nexon.ev has been cut by up to ₹1.2 lakh, with the long-range version now starting from Rs 16.99 lakh. The Tiago.ev’s price has been reduced by up to Rs 70,000, with the base model now starting at Rs 7.99 lakh. The company attributed the decision to the reduction in battery costs.

As the EV landscape continues to evolve, it remains to be seen how traditional auto manufacturers adapt to the changing dynamics and whether electric two-wheelers can indeed emerge as a formidable challenger to petrol-driven scooters in India.