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Electric two-wheelers sales could touch 22.02 million in financial year (FY) 2031 if battery costs reduce by 8% CAGR, vehicle power increases by 20% by FY 2024, and demand incentives continue until FY 2031.

The findings were published in a newly launched report by NITI Aayog and Technology Information Forecasting and Assessment Council (TIFAC), forecasting the penetration of electric two-wheelers in India. The report used an agent-based modeling technique for a bottom-up analysis of possible scenarios for electric two-wheelers.

The tool has been used to create possible scenarios for the penetration of electric two-wheelers in the country depending on various driving forces like technology, economy, society, and policy. Eight quantitative scenarios were constructed based on three major factors influencing the market penetration of electric two-wheelers– demand incentives, cost of batteries, and vehicle performance in terms of range and power.

Scenarios

Source: NITI Aayog


Results from the scenarios suggest that technology improvement and battery cost reduction are crucial for the self-sustenance of electric mobility. With demand incentives withdrawn after FY 2024, the maximum penetration of 71.54% will be in the technology-driven scenario. With no technological improvement and reduction in battery cost, a penetration level of 21.86% only can be achieved even if incentives are continued till FY 2031. A combination of technological improvement and incentives can achieve 100% penetration.

Market penetration

Source: NITI Aayog

In the case of the challenged diffusion scenario, when most conditions are assumed to be unfavorable, the maximum market penetration of only 5.82% can be achieved in FY 2024, followed by a decline due to the withdrawal of demand incentives, and finally reaching 3.1% in FY 2031. In the optimistic scenario, when most conditions are assumed to be favorable, the projected sale in FY 2031 is 22.02 million units. On the other hand, in the challenged diffusion scenario, the sale is 985,000 units and 780,000 units in the financial years 2024 and 2031, respectively.

Sales will be impacted when the demand incentive is discontinued after FY 2024. In the incentive-driven scenario, demand incentive is assumed to continue throughout, but with only a 2% reduction of battery cost annually and no improvement in range and performance. In this case, the electric two-wheelers sales in FY 2031 will be 5.49 million units at a market penetration of 21.86%.

The projected battery demand in FY 2031 will vary from 1.28 GWh in the challenged diffusion scenario to 114.25 GWh in the optimistic scenario.

The total requirement of charging points in FY 2031 is projected to vary from 29,639 units in the challenged diffusion scenario to 774,746 units in the optimistic scenario. However, these are for full constraint conditions, when available infrastructure and production capacity may restrict the sale.

The study is critical because the Indian vehicle market is primarily dominated by the two-wheelers, accounting for over 70% of the registered vehicles in the country. It is considered essential that India replace petroleum-run vehicles with electric vehicles owing to rising petroleum prices, air pollution, and the adverse impact of climate change. Therefore, any effort to address the problems associated with fossil fuels in the transport sector must focus on two-wheelers.

Recently, the Haryana government issued the State Electric Vehicle (EV) Policy, 2022, to promote clean transportation and create an ecosystem for manufacturing EV components. Haryana will issue coupons for purchasing EVs along with road tax exemption.

In the draft battery swapping policy recently issued by the NITI Aayog, manufacturers were urged to ensure that an appropriate battery management system (BMS) was implemented to protect the battery from the thermal runway. The BMS must be self-certified and have a high level of protection at the electrical interface. A rigorous testing protocol must be adopted to avoid any dielectric breakdown, arc phenomenon, or any unwanted temperature rise at the electrical interface.