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How electric scooter market is different than the ICE scooter market

From scooter rationing in the 1970s- 80s to anytime/anyplace availability with BS6 emission compliance today, the IC engine scooter market has seen huge progression. It has evolved over time, and the evolution has been pretty organic. The customers who have witnessed the evolution appreciate how the IC engine scooters have served their generations, from grandfather to father and to the next generation.

But the evolution wasn’t smooth, and things always got challenged. The Scooter market was no different. The rise of four-wheelers was the first challenge the two-wheeler industry faced. With growing economics, people started moving towards a four-wheeler as it became a status symbol. However, the challenge was short-term as the population went on increasing, and four-wheelers proved not to be a natural alternative to two-wheelers, given the cost, road conditions, and traffic.

Now the IC engine scooter is facing toughest challenge of its lifetime, perhaps it’s existence has been threatened. The challenge is posed by the electric evolution or the electric scooter. The long-term benefits of EV scooters are challenging the existence of IC engine scooters. The transition is pretty rapid. 5 years ago, only a couple of EV scooters could be spotted on the road. Today, we can see that 5% to 10% of two-wheelers are powered by e-mobility every month. With the government’s push towards electrification and the increasing options available in the market, electric 2Ws are quickly gaining favor among consumers.

The environmental benefit was always there, but now the long-term savings calculations are making the scooter more and more viable. In the government’s view, the rise in EV numbers will not only help the environment but also reduce the import of crude Oil, which affects the forex reserves. The government even subsidized electric scooters for promotion, which has helped vastly.

Customer Perspective

Has anything changed from the customer’s perspective? The on-paper savings are evident, but many are still not convinced about going for an EV. What are the reasons for that? What are the differences between the ICE scooter and EV scooter markets?

  • Cost: Currently, the acquisition cost of EVs is comparatively higher. The majority of the lithium-ion cells are still being imported from China, and then batteries are assembled in India. The import from China is still making lithium-ion batteries very expensive. Plus, given a life of 3 to 4 years, if you end up saving INR 40,000 on petrol in that time, you will have to spend INR 30,000 on the lithium-ion battery for replacement. So, people are still questioning the actual financial benefits arising out of the EV scooter. The perception can change if the lithium battery costs go down.
  • Charging infrastructure: Today, we see gas stations or petrol pumps on every corner of the road. However, that’s not the case with charging infrastructure. It is still evolving and is still away from maturing. Another problem is the time required for charging, on a petrol pump you wait in the queue for not more than 5-10 minutes to fill up the petrol and just move ahead, But for charging you still need 1-2 hours for your battery to charge to 50%. In apartment complexes, having a personal parking space with a charging point has become a challenge for many individuals.
  • Buying decisions: In my opinion, the buying decisions in the case of a petrol vehicle were pretty simple; the decision factor sequence was Fuel economy –> maintenance/service –> brand –> fourth was the cost. People used to care more about running costs than buying costs. But with EV I think it will be Buying cost –> Brand –> features –> service. If you compare product to product, there are only two things that will matter the most in decision-making: one is the price, and the second is the brand perception. 
  • Market Scenario: In the case of IC engine scooters, there were 5 to 6 primary brands in India that survived the competition or the emission challenges. However, as far as EV scooters are concerned, numerous brands are already available, and many more are coming up. Customers will have an abundance of choices, and price will play a key role in their buying decisions.

I was wondering whether the growth of the EV scooter market would have been the same, if big brands like Bajaj or TVS had not entered the market. It seems that the entry of these brands has been a major contributor to the recent growth of the market.”

Service will be challenging

In my opinion, the availability of spare parts and service will be the biggest challenge for electric scooters. The cost of spares, such as batteries and motors, is higher, which will undoubtedly impact customer decisions.

In conclusion, the future of the scooter market will be shaped by the cost of acquisition, service and brand value. As the market evolves, consumers may prioritize these factors when making purchasing decisions.

About the Author:

Abhijit Kulkarni

Founder – Exponent Business Solutions, Pune



Also read: India ICE vs EV sales for top 2W and 3W OEMs in March 2024

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