EV Two-Wheeler Makers Are Leaning In As Premium Market Grows

The sales executives at a TVS Motor showroom in Mumbai’s Malad are trained and ready. If a customer walks in looking to purchase a petrol-based scooter like the TVS Jupiter, the team will first ask them their daily kilometre requirements. If it's anywhere between 10 and 25 km, they will nudge them to consider the company’s slightly more expensive electric scooter – the TVS iQube. 

“We have trained our executives for this… since we’re being asked to push more electric vehicles (EVs),” Akash, the showroom’s general manager told The Core. While the ex-showroom price of a TVS Jupiter is between Rs 73,340 - Rs 89,748, the iQube costs considerably more with its price varying between Rs 99,130 - Rs 1.61 lakh. However, the sales executives explain how the total cost of ownership can be more favourable with an EV. 

TVS, which has been making an aggressive push into the EV space this year, launched its premium flagship scooter, the premium TVS X, priced at Rs 2.5 lakh in August. Delivery is expected to start in December. It also recently started production for BMW’s electric scooter- the CE 02, which is expected to be launched in November this year and reports estimate that it will be priced between Rs 7-8 lakh. 

And it's not the only EV market leader foraying further into the premium segment. Ola Electric – which continues to rule with the largest market share in the EV two-wheeler market – expanded its S1 series to introduce the more affordable S1 X (Rs 99,999) and also an updated version of its premium product Ola S1 Pro Gen 2 (up to Rs 1.47 lakh) in August.

 Ather Energy had three new launches in the same month – a brand new model Ather 450S and two revised versions of the Ather 450X. The three models range between Rs 1.30 lakh and Rs 1.68 lakh. In July, Okinawa Autotech launched the new advanced version of its flagship Okhi-90 at Rs 1.86 lakh, ex-showroom, and deliveries started rolling out in September. 

“If you see overall across segments and even sectors, we see that premiumisation is playing a very critical role,” Pushan Sharma, director of research, CRISIL Market Intelligence and Analytics told The Core.

For EV two-wheelers, this comes even as sales volumes dipped in the last quarter after the government announced slashing the FAME-II subsidy for EV two-wheelers.

Subsidy Slash Impact 

The FAME-II subsidy for electric two-wheelers was slashed in June this year from Rs 15,000 per kWh of battery with a 40% cap on ex-factory price to Rs 10,000 per kWh of battery with a cap of 15% of the ex-factory price. 

While sales peaked in May (1,05,000 units) following the announcement as people rushed to buy before the new prices set in, new vehicle registrations later fell from 67,000 units in April 2023 to a 12-month low of 46,000 units in June. Upfront costs of vehicles increased as manufacturers passed on the subsidy cut to consumers through price hikes of 15-20% on existing models.

However, the industry has recovered fairly since then. Sales in September at 63,796 units, are closing the gap with the sales in April this year at 67,000. In the overall second quarter of July to September, EV two-wheeler sales saw an 18.6% increase compared to the same quarter last year, according to the FADA. 

To adapt to the subsidy cut, several EV makers launched affordable variants of existing models or new affordable products for entry-level buyers. For instance, Bajaj Chetak slashed the price of its electric scooter by over Rs 20,000 in August. 

“To cater to the customer’s needs at the entry level, the OEMs (original equipment manufacturers) are ensuring that there is no void in what they’re offering,” said Sharma. However, he adds, that this isn’t what is solely driving sales. 

A Growing Premium Segment 

The premium segment, over the last couple of years, has been seeing more traction across the board – whether it is two-wheelers, passenger vehicles or EVs. 

While the share of vehicles priced over Rs 90,000 was about 19% in the last fiscal year, the share has now increased to 21% in the first quarter of FY2024, Sharma pointed out. “So clearly one can infer that the premium segment is performing much better than the lower-end counterparts,” he added. 

As the premium buyer segment sees growth, manufacturers across the board are rolling out products to meet that specific demand, including market leaders in the EV space, which currently makes up less than 5% of the two-wheeler market. 

 

How they are performing might vary across the board. An Ola Electric showroom manager in Mumbai, who requested anonymity, told The Core that sales hadn’t seen too much of a dent after the subsidy cut. The showroom sees an average of 7-10 daily walk-ins, which hasn’t changed since before June. Among the new variants, there was equal interest in the slightly more affordable Ola S1 Air, priced at Rs 1.19 lakh and the Ola Pro Gen 2, at Rs 1.47 lakh. 

“People are preferring the premium models because of the features they get,” he said. The hyper mode, which increases acceleration, is one of the favourites. “And people come here through referrals or because of the brand we have built,” he added. 

For Ather, its most expensive model – the 450 X, is the best-selling product, a showroom general manager in Mumbai told The Core. The manager, who requested to remain anonymous, said that sales had significantly slowed down compared to the same time last year, attributing this to an increase in competition, as well as the slump after the subsidy cut. 

On average, the showroom’s daily walk-ins have dropped from 4-5 in May to 1-2 in the last month. However, 90% of the units the showroom sold in September were the two variants of the Ather 450X and the Ather 450S accounted for 10% of the sales. 

This isn’t the case elsewhere. Ganesh Kapasi, who manages showrooms in Mumbai for Okinawa, Benling and Gauss said that since its launch, the showroom has only seen four registrations for the Okhi-90. “Currently [our] customer's expected price point sits somewhere between Rs 80,000 - 1.25 lakh,” he told The Core. The showroom, based in Mumbai’s Kandivali, has been selling an average of 40-50 units per month, following the subsidy cut. Okinawa’s Praisepro (priced at Rs 99,645) and the R30 (priced at Rs 61,998), have been the best-sellers in the last quarter, he added. 

What Next? 

When it comes to EV sales, the industry’s volume growth is expected to be at around 25% in this fiscal year, and EV penetration in the two-wheeler market is expected to be 5.3%, according to a report by CRISIL. 

Meanwhile, electric two-wheeler manufacturers and dealers are banking on the upcoming festive season to boost sales. This, plus a host of new launches lined up for later this year and next year – many in the affordable segment – may further boost entry-level sales in the second half of the year. 

However, the growth in premium EV models is also expected to continue. There is a lot of OEM interest in the premium segment currently, Sharma pointed out. “Given how customer demand is, we are seeing more traction from players in terms of launch of premium vehicles – and we expect to see this trend being pronounced in the near term…for the next 1-1.5 years,” he said. 

The Core reached out to Ather Energy, Ola Electric, TVS, and Okinawa for comment. This article will be updated when a response is received.