The rise in petrol prices have, once again, put the spotlight on electric scooters – a mode of transport that is gaining in prominence with each passing day.
The latest revision to the government’s FAME Phase II scheme brings an increased subsidy rate of Rs 15,000 per kwh for e-scooters. To avail the subsidy, scooters need to have a minimum range of 80 km/h, and a minimum top speed of 40 km/h.
According to a report by The Society of Manufacturers of Electric Vehicles, 2019-’20 was the strongest year in terms of electric two-wheeler sales, having sold 1,52,000 EVs, followed by a 6 percent drop in sales, next year due to the COVID-19 pandemic.
According to NITI Aayog, electric two-wheelers are projected to occupy 80 percent of India’s enormous two-wheeler market by 2030. NITI Aayog Chairman, Amitabh Kant, has stated that the country is ready for 100 percent electrification of electric two and three wheelers.
This despite the fact that electric scooters currently account for a negligible fraction of India’s sub 2 million two wheelers per year sales figure. Evidently, India’s EV market will grow from the bottom up.
Tarun Mehta, co-founder and CEO of Ather Energy Pvt Ltd, concurs. “Our products typically take 10 months to break even, in terms of total cost of ownership, when compared to an equally powerful ICE (internal combustion engine) scooter. There used to be a time when it used to take 5-6 years for the math to make sense. That number now takes 18 months”.
Ather’s rapid ascent has been one of the main highlights of India’s home grown EV success story. Much like any start-up, it wasn’t an overnight success. In fact, it’s only in 2021, that the brand managed to have what Mehta calls “positive economics”.
“Earlier, every product sold by Ather actually lost us money. It was a new product, new architecture etc so everything came at a cost and volumes were small,” Mehta said.
Today, Ather Energy is visible in over 10 major cities, with its latest product - the Ather 450X (which now costs Rs14,500 less), headlining a new crop of slick, sophisticated e-scooters which possess a key aspirational quality.
“As the volume built up, and the supply chain stabilised, the entire math changed” claims Mehta, while adding “The first generation of scooters took 3-4 times longer to assemble. Because the supply chain wasn’t optimised the way it is now”.
The last three years have seen several e-scooter makers emerge as key players in the EV marketspace. Okinawa Scooters, founded in 2015, now occupies 36 percent market share in the highspeed electric scooter segment, according to founder and MD Jeetender Sharma.
In the last quarter alone, Okinawa has seen a 30 percent bump in sales. “Next year we are aiming for three times the growth we experienced last year” says Sharma, who’s math, following the most recent fuel price hike, makes a compelling argument in favour of electric scooters.
“The running cost for an internal combustion scooter at present is roughly Rs2/km, whereas for electric scooters it’s 15-20 paisa per km” says Sharma, adding “After the introduction of the BS-VI regulation, the cost of ownership of two wheelers has already been increased. Globally battery charges have gone down. Okinawa's cost is on par with that of a 110cc scooter, because our cost is roughly 80k, while theirs is 85k. There is no registration cost either, for electric scooters”.
What really is the issue?
With such a clear advantage over their petrol-powered counterparts, what exactly is keeping the electric scooter from devouring India’s gargantuan two-wheeler market?
“The only thing holding us back is just general awareness. There’s a technology adoption curve – you’ve got early adopters, then you’ve got early majority then you’ve got late majority” says Tarun Mehta. “Right now we’re still selling to early adopters, even the early majority has only started hearing about EVs.”
The infrastructural burden required to sustain electric scooters is far lesser than what is needed for electric cars. Scooters don’t need to cover long distances, and charging times are much lower, thereby resolving the issue of range anxiety.
And yet, infrastructural issues at a domestic level, have, according to Mehta, proved to be an impediment in the adoption of EV scooters. “Home charging is a problem,” says Mehta, who helped launch the Ather 450X last year, which takes a little over 4.5 hours to be fully charged.
“There has got to be a way where we can figure out, at an apartment level, how people can get access to a simple, 3-pin, 5-amp socket” he states, adding “You can get a three-pin plug, you can easily find a way to gain electricity access from your apartment or your meter, but it requires calling up your housing association, speaking to the secretary and a lot of additional work”. Mehta believes that the only solution to this is to have some sort of mandate enforced by the government. “Ideally, if there’s some kind of mandate from the ministry of urban affairs, some sort of push or incentive from the government, because in the absence of that, a lot of customers who want to switch to electric won't.”
Okinawa has taken a simpler approach to the problem: detachable batteries. With the new Okinawa Praise Pro, you can simply carry the batteries to your home, charge it and bring it back. Seems elegant enough, but many manufacturers, Ather included, aren’t entirely convinced.
“Removing the battery comes at a cost. Cooling takes a hit. You can’t fast charge it and, in the end, your battery performance has dropped by 20-30 percent” says Mehta, pointing out the logistical challenge of having to tow a heavy, 7 kg battery, multiple packs of it, back and forth, from apartment to parking door. The very thought seems exhausting.
“I think there’s enough momentum in the EV market that the customers will want to find a solution to domestic charging concerns. But it’s better if the solution is driven by the Central govt”.
Both Jeetender Sharma and Tarun Mehta agree however, that the future for electric scooters in India, looks very bright. Both are also bullish on local manufacturing of battery technology, something that has always kept EV costs high in India.
“We will have local cell manufacturing in the next 3-4 years. There are some big, big business opportunities there” says Mehta. “In fact, a recent report highlighted that India could be the most competitive cell manufacturer in the world for particular types of lithium-ion chemistry which are really suited for the automotive environment”.
“And if cell manufacturing moves locally we already have access to some of the raw materials. Lithium is not the biggest component of lithium-ion cells, surprisingly. And there we have a lot of countries which we can tap into, like Australia. We don’t have to necessarily go to China for lithium. In fact, China doesn’t go to China for lithium, China goes to Bolivia.” he reveals.
As for Okinawa, Sharma is equally optimistic, “We have 92 percent parts localised. Suppliers are already in line with OEMS like Okinawa and I don’t think in the future OEMS will require any import materials from India”.
The dark horse
Despite competition emerging from Bajaj, Ola Electric etc, Ather has one ace up its sleeve that others don’t. The brand is working to create, not only an aspirational product, but an ecosystem that makes itself indispensable to the customer, much like Tesla or Apple.
Experience centres, easy charging hotspots within the city define the Ather customer’s user experience, confirming that it’s not policy change that will drive demand, but user experience.
When you go to an Ather fast charger, you don’t have to worry about taking a mobile app, scanning a QR code, waiting for authorisation etc. You literally go to any fast charger, take the cable out, plug it in and you’re done. Everything’s integrated within the ecosystem. Payment is automatically done at the back end. So what exactly will be the differentiating factor for electric scooter brands going forward? The answers vary.
While manufacturers like Okinawa maintain that performance will be central to their product’s appeal, Ather is equally keen on mixing software, UI, performance etc to create what Mehta calls “a magical user experience that is leagues ahead of a standard petrol or electric scooter”.
But Mehta wishes to go one step further, by reforming the second-hand scooter market as well. Because the average scooter ownership, in urban markets is down to four years, but that’s not where the e-scooter lifecycle ends.
“You shouldn’t as a customer be guessing ‘mm did you mess with the battery?’ Did you at any point change the motor or not?” Says Mehta. “Today a lot of financing of two-wheelers carries a lot of risk because nobody knows what’s happening with the vehicle. There’s no data, no transparency, there’s no tracking. And there’s a lot of risk modelled on pilferage, damage and outright theft. We want to be able to take those things out.”
Of the lot, Ather does appear to have the most holistic approach. One that is likely to pay huge dividends. “Ather is significantly ahead of the competition, in fact even on international benchmarks we are furthest along on HMI, dashboard connectivity etc. But I think we will win long term with the entire experience these specs will deliver.”
India’s massive two-wheeler customer base may not be ready for widespread adoption of e-scooters yet. But the fact that even a pandemic couldn’t keep e-scooters from having a strong year, suggest that their graph has nowhere to go but up.