Olas EV entry triggers price war

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    The entry of the ride-hailing company Ola into the field of electric two-wheelers has triggered a price war in the segment.

    EV players like Ather, Okinawa, Pure EV, Simple Energy and traditional two-wheeler manufacturers like TVS Motor Co, Hero Electric and Bajaj Ltd sell e-scooters ranging from Rs 70,000 to Rs 1.13 lakh backed by government subsidies.

    Models like Ather 450X / Plus, Okinawa Praise, Pure EV Pluto, Simple Energy One, TVS iQube and Bajaj Chetak are enjoying an interesting price game after Ola announced that its S1 and S1 Pro models will sell for 99,999 rupees and 129,999 rupees, respectively.

    Existing players in the e-scooter sector are sticking to their price points despite the competitive pressure, experts said.

    The Indian electric two-wheeler segment is currently dominated by a handful of players and Ola’s entry has further charged the e-scooter landscape, it said.

    India has the potential to become a global hub for electric vehicle manufacturing, and Ola’s electric vehicle ambitions depend on its pricing.

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    Affordability could help achieve an order of magnitude in a vehicle segment where traditional motor scooters cost anywhere from 75,000 to 80,000 rupees.

    When announcing the prices of his e-scooter in August, Ola boss Bhavish Aggarwal said that low running costs and inexpensive maintenance could help it compete with traditional two-wheeler manufacturers.

    “Ola’s scooter awards come from a well-known disruptor. Competition will have to counter it as USPs for e-scooters in terms of pricing, technology and efficiency,” said VG Ramakrishnan, MD of Avanteum Advisors. “Ola has managed to efficiently establish its brand and sourcing to serve large volumes.”

    EV companies will compete for technology and performance in addition to price, said Jeetender Sharma, managing director of Okinawa.

    “The benchmark is the Honda Activa and it should be easy to convert into an e-scooter. Consumers prefer e-vehicles because of the lower cost of ownership,” said Sharma.

    Tarun Mehta, CEO of Ather Energy, said car buyers do not choose to buy “after a small price delta”.

    The market is growing and will pick up speed in the next few years.

    Electric scooterETtech

    “Unlike the conventional two-wheeler market, the electric vehicle industry is only 1% of the segment and artificial price cuts will not help growth, just burn more money, which is not in the best interests of a gamer,” said Naveen Munjal, MD of Hero Electric, one of the first participants in this field to sell their e-scooters in the price range from Rs 60,000-Rs 70,000.

    Several e-scooter models have been significantly reduced in price thanks to various government subsidies that have been passed on to customers, making the products affordable, according to the manufacturers. “Our prices have come down because of government subsidies,” said Mehta.

    The price war is against the backdrop of the government’s decision to increase subsidies for electric two-wheelers by 50% to 15,000 rupees per kWh under the government’s FAME II program, which came into effect in 2019, to encourage the transition to electric vehicles accelerate.

    As the demand for electric two-wheelers increases, the supply of parts from China has been hampered, which is hindering volumes.

    “We are import dependent and localization is currently 50% due to supply shortages,” said Anjali Rattan, founder of Rattan India Enterprises, which recently invested Rs 150 billion in electric motorcycle maker Revolt Intellicorp. “The large-scale adoption of electric two-wheelers is still plagued by cost and infrastructure issues,” she said.

    Hero Electric’s Munjal said the company was “training road mechanics, installing portable batteries in two-wheelers and helping consumers.”

    EV companies need size, a robust supply chain, and a dealer network, he added.

    Experts said government subsidies will increase adoption, stimulate research and development, and innovation to move closer to the goal of 30% of the two-wheeler market in five years from just 1% today.

    In the 2020-21 period, sales of electric two-wheelers were 140,000 units, while sales of conventional two-wheelers were 17 million.

    India’s electric vehicle market could reach $ 206 billion in a decade with over 100 million units sold, according to Delhi-based think tank CEEW Center for Energy Finance.

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