e2Ws volume growth to slow to 25% in FY24, says CRISIL

After almost trebling to 7.3 lakh units in the last fiscal, volume growth of electric two-wheelers (e2Ws) is set to slow to 25% in this fiscal following the recent reduction of subsidy under the FAME-II scheme and the consequent price hikes in existing models, CRISIL Ratings said in a report.

After almost trebling to 7.3 lakh units in the last fiscal, volume growth of electric two-wheelers (e2Ws) is set to slow to 25% in this fiscal following the recent reduction of subsidy under the FAME-II scheme and the consequent price hikes in existing models, CRISIL Ratings said in a report.

However, to counter this, the e2W manufacturers are adapting to the new subsidy regime by optimising their product portfolio and introducing more affordable variants with lower battery sizes, it added.

“Over the medium-term, penetration of e2Ws will be accelerated by favourable total cost of ownership (TCO), expected reduction in the initial acquisition cost due to economies of scale and increased localisation of components,” the rating agency said.

Naveen Vaidyanathan, Director, CRISIL Ratings Ltd. said, “Despite the subsidy cut, industry growth continues to be supported by fundamentally favourable economics for e2Ws. The total cost of ownership is estimated to be 20% lower for e2Ws compared with petrol variants even under the current subsidy regime, as against 32% lower under the earlier subsidy regime.”

“The average running cost of 25-30 paise per km compared with ₹2-2.25 per km for a petrol vehicle makes a difference over the life of the two-wheeler,” he said.

Pushan Sharma, Director-Research, CRISIL Market Intelligence and Analytics said, “Newer models will enhance affordability by lowering the upfront cost by 10-15%. These steps by e2W manufacturers, along with the expected festive-season spurt, would support growth in second half, albeit on a high base, leading to an overall ~25% growth in e2Ws this fiscal.”