Electric Two-Wheeler Industry Faces Twin Troubles
India's nascent electric two-wheeler industry has run into twin problems.
Demand for electric two-wheelers slowed as the nascent industry grapples with chip constraints and concerns stemming from scooters catching fire.
Retail sales of battery-powered two-wheelers tumbled 20% over the previous month to 39,486 units in May, according to data sourced from the government's Vahan portal. Hero Electric Vehicles Pvt. and Ola Electric Mobility Pvt. saw the biggest drop at 56% and 27%, respectively.
Sales are still comparable with months prior to May. Demand for battery-powered vehicles has been driven by costlier fuel and higher prices of petrol-driven scooters and motorcycles. Volumes have already more than doubled so far this year and are expected hit 10 lakh by the end of FY23.
Yet, dealerships are worried. At least for the short term.
BQ Prime spoke with nearly two-dozen dealers of Hero Electric, Okinawa Autotech Pvt., Pure EV (PUR Energy Pvt.), and Ampere Motors (Greaves Electric Mobility Pvt.) to gauge the pulse of the electric two-wheeler market. The outlets spanned across, Madhya Pradesh, Karnataka, Maharashtra, Rajasthan, Delhi, and Uttar Pradesh. Several of them spoke on the condition of anonymity out of business concerns.
Most of the dealers are facing shortage of vehicles due to chip disruption. BQ Prime had reported in April about the impact of poor supply on the demand for electric two-wheelers. That pain shows no sign of abating.
For Hero Electric, India’s largest electric two-wheeler maker, April was a washout month due to chip constraints, and it continued till the middle of May, one person privy to the development told BQ Prime.
Hero Electric, in a statement to BQ Prime, said it was not able to meet the upsurge in demand due to supply chain constraints impacting production temporarily. "We reported zero sales in April due to extreme chip shortage and we could only resume our productions from May 15," Hero Electric CEO Sohinder Gill said, adding that it use that time to augment its manufacturing capacity to 2,00,000 units.
A Hero Electric dealer in Madhya Pradesh said he did not get any stock in May. While the situation has eased and supply has resumed, there is still a shortage, he said.
Kamal Yadav, a Haryana-based Ampere Motor dealer, said he was only able to meet 40% of the demand due to poor supply. The company, according to Yadav, expects the supply situation to ease by September.
Safety Concerns
Recent incidents of fire in electric scooters are also making consumers apprehensive. A LocalCircles survey in April also found that about 21% of buyers interested in an EV are staying on the sidelines due to safety, performance, and infrastructure concerns.
A Delhi-based Pure EV dealer said the demand has halved after the fire incidents. An Okinawa dealer said footfalls have reduced but he sees it as a short blip.
An Ola executive, speaking on the condition of anonymity, said the company is now worried about the image perception post the fire and safety incident. The executive, who is not authorised to speak to the media, said while inquiries for its electric scooters continue, but the pace has slowed down.
Abhay Singh Rajput, an Okinawa dealer in Rajasthan, said they have started making buyers aware of dos and dont's to prevent fire.
BQ Prime awaits responses to queries emailed to Ola Electric.
While buyers are not cancelling purchases, they have put them on hold as many cases of EVs catching fires have come into the spotlight, Vinkesh Gulati, president at Federation of Automobile Dealers Associations of India, said over the phone from New Delhi. Customers need assurance both from the companies and the government on safety, he said.
“This could have added to the dip we have seen in the sales in May, but it is going to be temporary," he said.