It seems natural for Indian two-wheeler makers to use their strong foreign market presence to sell their E2Ws, especially when India has a minuscule E2W export footprint at present. Though India has a booming domestic E2W market, it exported just 1,609 units of E2Ws in FY24. Compare it with China’s mammoth exports of 15.046 million units in calendar year 2023. It shows a huge export market already exists, where India is already an entrenched player when it comes to ICE two-wheelers.
India’s electric vehicle (EV) revolution is led by its two-wheelers, E2Ws constituting 55 per cent of the total EV sales.
Market share of electric two-wheelers rose from just 0.4 per cent in 2020-21 with 252,641 units sold to 5.4 per cent by early 2023 with 728,054 units sold. It is further expected to increase by 13 per cent in the next couple of years.
With increasing sales, production and rampant launches across segments, Indian companies have a vast export opportunity for their E2Ws in smaller countries.
India’s giant two-wheeler industry
India has long been a global leader in two-wheeler production and exports. India clocked 15.86 million units in the fiscal year ended March 2023 with exports at 3.6 million units, despite facing challenges like inflation and currency volatility in some of its major markets, such as Africa.In FY24, two-wheeler sales grew by over 13 per cent to 17.9 million units. Meanwhile, the sector saw a slight 5% dip in exports at 3.458 million units of two wheelers in 2023-24, last fiscal due to the above-mentioned factors, but a recovery is underway, with exports growing by double digits from January to April 2024. In absolute terms, the two-wheeler industry saw 1.2 million units shipped, a growth of 29 per cent from the corresponding period. Notably, in February this year, exports touched a 19-month high at 0.33 million units.
Given India’s existing expertise and strong foothold in global two-wheeler exports, the country is well-positioned to become a key player in E2W exports. With the shift toward electric mobility, Indian manufacturers are now exploring export opportunities in emerging markets, where affordability and sustainability are key requirements.
Electrifying two-wheelers
India’s domestic E2W market has seen rapid growth in recent years. Around 0.94 million electric two-wheelers were sold in FY24, a 30 per cent increase from the previous year, marking significant progress in the adoption of sustainable mobility solutions.
The E2W sales in 2023 grew by 40 per cent when compared to 2022, thanks to government subsidies like FAME II, which offered financial incentives to make E2Ws more affordable. Additionally, rising fuel costs and the growing environmental consciousness among urban consumers have bolstered demand for electric vehicles. FAME II and Electric Mobility Promotion Scheme (EMPS) played a pivotal role in making E2Ws more affordable and accessible to the masses, driving India’s EV adoption. The government offers a subsidy of Rs 10,000 per kWh of battery with a cap of up to 15 per cent of the cost of an E2W’s ex-factory price as part of the FAME II.
Though India’s domestic E2W market has flourished, exports are still nearly non-existent. However, the groundwork is being laid for Indian manufacturers to expand their electric vehicle footprint globally, particularly in emerging markets where the need for affordable and sustainable transportation is critical.
According to SIAM data, India’s E2W exports in the first quarter of FY25 have already surpassed the total e-scooter exports for the entire FY24, which stood at 1,603 units. With 2,814 units exported in just the first three months of FY25, the figure is ahead by 1,211 units, signaling strong growth potential with nine months still remaining in the fiscal year.
These export volumes represent 1.80% of India’s total two-wheeler exports, which totaled 155,980 units during the April-June 2024 period.
Five major domestic manufacturers — Ola Electric, TVS Motor, Ather Energy, Bajaj, and Ampere — dominate the market, accounting for more than 75% of sales. TVS Motor recently launched five variants of its popular iQube scooter, while Hero MotoCorp is expanding its electric portfolio under the Vida brand, with plans to introduce new models in the near future. Revolt Motors, a pioneer in the electric motorcycle segment, has also announced plans to begin exporting its electric bikes, starting with markets like Sri Lanka.
Speed bumps on the way
Despite India’s strong position in E2W manufacturing, challenges persist. The phasing out of FAME II subsidies and the introduction of the new PM E-DRIVE scheme will reduce government support, making it harder for manufacturers to maintain price competitiveness. The new scheme will provide Rs 10,000 per electric two-wheeler sold until March 2025, but this amount will be halved in the following year, which could impact sales and production volumes in turn damaging consumer sentiment.
Additionally, India’s battery manufacturing sector is not yet as advanced as China’s and addressing this gap will be key to India’s success in both the domestic and export markets.
Currently, India relies heavily on imports for battery components, which adds to the cost and logistical complexity of producing E2Ws. In FY23, China was the leading region of accumulator and battery imports to India, amounting to almost $2.6 billion, as per Statista, out of total import of accumulators and batteries to India amounting to $3.59 billion.
Emerging E2W giant but a minnow before China
India’s domestic E2W growth has been impressive, but China remains far ahead in terms of scale and global market dominance. In 2023, China sold nearly 6 million electric two-wheelers, compared to 0.94 million in India.
China has also established itself as a major exporter of E2Ws, with large volumes going to markets in Southeast Asia, Africa and Europe. In fact, China accounts for nearly 90% of global E2W sales, with projections showing it will continue to dominate through 2035.
In terms of numbers, China, which follows the January-December period, exported 15.046 million units in 2023 as against India’s 1,609 units of E2Ws in FY24.
While Indian companies like TVS and Bajaj are beginning to explore international markets for their electric models, there is a significant gap to close if India is to compete with China on a global scale. With 2,814 units exported in April-June 2024 led by TVS and Ather, India is expected to close FY25 at a far higher figure in exports.
Kickstarting the ecosystem
Though Indian consumers have taken to E2Ws in a big way causing a bump in production, India’s E2W boom is heavily dependent on imports largely from China. India still lacks the native ecosystem that can bring down costs as well as increase efficiency despite government policies that encouraged localised manufacturing. Many companies availed of government subsidies for local manufacturing but continued selling vehicles assembled from imported parts.
The government launched Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) in 2015 with a budget of Rs 895 crore. FAME II, an expanded iteration of the programme, was rolled out in 2019 with an outlay Rs 10,000 crore. These schemes were aimed at supporting the sale of locally produced E2Ws. Subsidy disbursals under the scheme were tied to a phased manufacturing programme (PMP) in line with a progressive increase in localisation levels over time. However, many companies did not adhere to the PMP, but continued seeking FAME subsidy, defeating the scheme’s intent. The government issued notices for recovery of subsidy distributed to these companies, many of which contested the claims. FAME II was in force from 2019 to 2024 and was successful in supporting sales of nearly 1.4 million E2W.
The new iteration of the scheme, the PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-DRIVE), has stringent scrutiny provisions.
The future of India’s E2W exports is dependent on the emergence of local manufacturing supply chains for battery, charging, motor, material and safety technologies. The auto component industry is expected to invest over Rs 25,000 crore in the next three-four years to expand production of electric vehicle parts, rating agency Icra has said. There has been substantial localisation in traction motors, control units, and battery management systems over the years, Icra said. However, advanced chemistry batteries, which remain the most critical and the costliest component, accounting for almost 35-40 per cent of the vehicle price, are imported, it added. The low localisation levels give rise to manufacturing opportunities for domestic auto component suppliers, it said.
About 45-50 per cent of the projected investment would be towards battery cells, as per Icra. The PLI scheme, recent e-vehicle policy and state incentives would also contribute to accelerating the capex.
The rating agency projects the domestic E2W component market potential to exceed Rs 1 lakh crore by 2030. Battery cells are currently not manufactured in India, and thus most original equipment manufacturers (OEMs) rely on imports.
Bengaluru-based Ather Energy, which specializes in electric two-wheelers, has recently signed a battery purchase deal with Amara Raja Energy & Mobility for India-specific batteries. The move aims to reduce reliance on imports and address supply and price volatility. Ola Electric plans to invest $100 million (about Rs 834 crore) in the first phase of building its gigafactory for producing lithium-ion battery cells. Founder Bhavish Aggarwal has said that Ola’s electric scooters will feature the locally-produced battery cells as early as next year.
India has a large and growing E2W market for its E2W makers to achieve huge scale. But unless Indian E2W industry cuts reliance on China and has its own component ecosystem, it can’t hope to create a large export footprint like it has done in case of ICE two-wheelers.