Moneycontrol Pro Panorama | A transformation in the scooters market

For scooter owners, who primarily use their vehicles for short distance journeys, the prospect of not spending money on petrol is a big draw.

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Donald Trump’s return as the US President may take the wind out of the global fight against climate change, but some of the changes that have already been set in motion on the back of technological innovations are making their presence felt in the market.

The electrification of two-wheeler market in India is a case in point.

The electric vehicle (EV) penetration in scooters rose to 21.4 percent in September 2024 from 13.8 percent in the year-ago period, according to data from Ola Electric Mobility. The electrification in scooters gained pace in 2024, rising from 15.5 percent in February to one-fifth of the market now.

The market share of EVs, including motorcycles in two-wheelers, increased from 4 percent in April to 7.5 percent in September 2024. The market share rose despite the changes in incentives provided by the government to the industry. “E2W penetration is at an inflection point,” Ola said in an update.

Users are adopting EV two-wheelers as acquisition costs moderate and automobile companies broaden the product offerings.

For scooter owners, who primarily use their vehicles for short distance journeys, the prospect of not spending money on petrol is a big draw. Cost metrics — running cost per kilometre — are also in favour of EVs.

Early adopters of electric scooters whose vehicles are due for a replacement plan to stick to EVs rather than go back to petrol-fired vehicles, shows anecdotal evidence.

The overall share of EVs in two-wheelers may seem low at 7.5 percent currently. However, the ratio of EVs in total two-wheelers is projected to accelerate as companies launch new vehicles. “We expect a faster EV penetration journey in motorcycles compared to scooters since the infra and awareness for EVs is already built,” adds Ola.

Analysts at Nomura estimate the share of electric two-wheelers, including motorcycles, to rise to 25 percent by FY30, up from 7.5 percent now. The rising EV adoption can reshape the two-wheeler industry in India.

Companies who are slow to launch EV products or push them aggressively can fall behind. A large part of the electric two-wheelers market is already captured by unlisted companies.

As companies launch cheaper vehicles, sales of petrol-based scooters, which currently constitute a large portion of automobile companies’ sales currently, can begin to decline in the next two years, warn analysts at Nomura. While this warrants investors' discretion in two-wheeler stocks, short-term political changes are unlikely to reverse technological transformations spreading through the global automotive market.
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