Despite being singed by battery fires, E2W industry confident of bouncing back

An Ola electric scooter.

Prateek Thakur (25), a management consultant who recently shifted to Bangalore, wanted to buy an electric 2-wheeler (E2W). for his daily commute. But, after seeing reports of electric scooters catching fire and causing deaths in multiple incidents, he began worrying about his safety. Thakur cancelled his order, settling instead for a pre-owned Bajaj Pulsar with a lower price tag. “There is no point risking my life for a product that may go up in flames,” he says.

Anshuman Purohit (36), an electrical engineer based in Jaipur, wanted to buy an Ather 450X and Ola S1 Pro electric 2 wheeler (E2W) and booked the two models in March for his commute and his family’s use. But after the spate of E2W fires and fatalities, he cancelled his bookings in May and decided to stick to riding petrol-engine bikes. “I have always been fascinated by future-ready technology and hence wanted to buy an e-scooter as that is the future of powertrains. I don’t mind shelling out even Rs 1 lakh if it is a groundbreaking product. But I consciously decided to cancel my bookings and have decided not to buy any electric scooter until the government comes out with some stringent safety standards for such products,” Purohit told Moneycontrol.

In a sense, Anshuman and Prateek epitomise the phobia that has gripped a section of potential E2W customers after a string of fire incidents involving these vehicles, which have led to injuries and even deaths. These fires, coupled with supply-chain issues, saw  E2W sales plummet nearly 20% in May from the previous month. Data on the VAHAN portal show that the registration of electric two-wheelers (both cargo and passenger) declined from 49,084 units in April to 39,492 units in May this year.

Those numbers almost mirror FADA’s latest data, which showed a month on month decline of nearly 20% in E2W sales to 39,490 units, from 49,183 units in April'22.

Interestingly, FADA had earlier revealed that E2W sales in FY22 were up by 463.61% at 231,338 units and sales in April, the first month of FY23, were up by 858% on a YoY basis. These stellar growth figures, however, all stand on a low base.

Since early April, there have been multiple instances of EVs catching fire, with e-scooters sold by Ola, Okinawa, Pure EV and Jitendra EV all going up in flames. In one instance, a father and daughter in Vellore suffocated to death inside their house after inhaling smoke from an EV on fire.

A similar incident in Gurugram saw Manoj Sahu, an employee of E2W maker HCD India, lose his father, who suffocated to death when a battery that was charging in their home caught fire. His mother died a few days later. Sahu and his younger brothers sustained burns from the fire.

These incidents forced the government to take notice and since then, some E2W makers have been compelled to recall their vehicles. While Ola has recalled 1,441 Ola S1 Pro and Ola S1 electric scooters, Pure EV has recalled 2,000 units. Okinawa Autotech recalled 3,215 Praise Pro electric scooters.

Federation of Automobile Dealers Associations (FADA) data show that Okinawa saw a 16% decline in MoM sales in May to 9,302 units, against 11,011 units sold in April. The Gurgaon-based company claims that the recall is part of a “comprehensive power pack health check-up” and it will check the batteries for any damage and repair them at no charges. “We have not witnessed any impact or drop in consumer sentiment as the company has undertaken robust steps to address customer concerns on priority,” said Jeetender Sharma, Founder and MD, Okinawa Autotech.

However, the series of fires and consequent recalls have spooked many prospective E2W buyers, who began to postpone their purchases.

It is pertinent to note here that the government is expected to soon come up with safety norms specifically for electric vehicles. These safety norms will be in addition to the safety norms that apply to ICE (internal combustion engine) vehicles.

Media reports suggest that the Automotive Research Association of India (ARAI), an autonomous body associated with the union Ministry of Heavy Industries, is already holding discussions on safety norms for EVs with industry stakeholders, including EV lobby Society of Manufacturers of Electric Vehicles (SMEV).

It is widely believed that a draft notification in this direction will be introduced this calendar year and key parameters such as electromagnetic circuits, battery size and cooling, vehicle charging, etc will be covered.

Industry representatives believe the sales decline in May is a temporary blip and are anticipating a massive upturn in sales once semiconductor chips are readily available and stringent safety norms around vehicle testing are in place.

Inflation and the relentless northward March of fuel prices are expected to continue driving users towards EVs, which have much lower running costs.

The fires notwithstanding, FADA hopes to see sales treble to 7.5 lakh EVs in the current financial year, with nearly 70% of the volumes expected from e2Ws. “The issues of fire and substandard EV products will be behind us as government regulations would have been implemented and even OEMs (original equipment manufacturers) would get ample time to implement whatever safety changes they have to in their product lines, says Vinkesh Gulati, President, FADA. “The negative sentiments on product quality will also be overcome. So, the numbers are expected to revive in the next 3-4 months and by September there will be a massive uptick.”

SMEV says that while 3.4 lakh units were sold in FY22, it is hoping that number will more than double to 8-9 lakh in FY23.  (The SMEV data includes low-speed electric two wheelers, which FADA excludes).

The industry association insists that the dip in sales is temporary, and mainly due to supply chain disruptions. It claims that brands already have a waiting period and once that comes down in the next couple of months, vehicle dispatches will also be smooth.

“Most domestic EV makers will be recalibrating their powertrains in order to make them a bit more compatible with Indian climatic and road conditions. By that time, safety and testing standards (for EVs) will also be formulated. In the process, fly-by-night operators selling substandard products will also cease their business,” says Sohinder Gill, President, SMEV.

Hero Electric, which was among the top 3 E2W players in FY2022, accounting for 28.05% market share in registered vehicle category sales, sold 1 lakh vehicles last financial year. The company maintains that it is extremely bullish on the market and is already expanding capacity and strengthening its supply ecosystem.

“Owing to persistent supply chain constraints, including the global chip shortage, we at Hero Electric updated our sales and dealer network in February on a ‘planned despatch halt’ in April. We used this time to recalibrate our supply chain and augment our manufacturing capacities further. We remain on track to triple sales and regain our position as the largest player in the industry this fiscal,” says Naveen Munjal, MD, Hero Electric.

Another OEM, Ather Energy, claims that it delivered 3,787 scooters in May, registering its highest-ever monthly sales till date. “The market penetration of e-scooters (out of the total two-wheeler market) in the country has gone from 4% to 12% last year and will only continue to rise. While any incident that puts consumers at risk is unfortunate and must be addressed at the earliest, we don’t feel that these incidents have derailed the momentum the industry has gained over the past 12 months,” says Ravneet S. Phokela, Chief Business Officer, Ather Energy.

SMEV, meanwhile, has reached out to its members to integrate ‘fire safety alarms’ in their product lines. Already tested by Hero Electric, the device is supposed to have three alarm levels to alert a user if the battery temperature increases beyond the safe limit, per SMEV’s claims.

The association has also come up with a set of guidelines for battery usage, charging patterns, etc., which its members are disseminating to dealers and customers. The industry body is also assisting policymakers in drawing up better safety standards for EVs.

“EV sales will bounce back as it’s impossible to stop electrification in India. New OEMs have to make sure that such incidents are not repeated and are captured during the early stages of quality inspections. The target should be to build the right quality the first time,” says Puneet Gupta, Director, Automotive, at market research firm S&P Mobility.