For the last 1.5 years, the customers in some of the EV segments like E- Scooters are being offered EVs at two price points corresponding to the level of technology, speed and power. However only 2% customer have really shifted to higher speed products. The major barrier being the prices and the diminishing TCO advantages of such higher speed products. It is therefore important to let the customer decide rather than forcing a particular technology or speed restriction on to them.
The following explanation clearly illustrates what are the issues
- High Speed Two Wheelers: Out of the 18 million customers buying petrol two wheelers in a year, majority of them are “real value for money” and cost conscious customers who buy Petrol 2 wheelers priced between Rs.45000 and Rs.60000 (average Rs. 52000). The 2 wheelers they generally buy give 50 km/lt, that translates to Rs.1.30 per km. These customers generally run the vehicles for 10000 km/year that translates to Rs.13000 per year. The initial cost + running cost for such petrol two wheelers for 3 years therefore comes to Rs.91000 (Rs.52000+3x 13000).
- An electric scooter with a maximum speed of 50km/hr and a range of 80 km with a Li- battery also costs around Rs.90000 (factoring 3 years of charging cost) even after the current subsidy of Rs.22000. The perceived advantages in running cost and lower maintenance cost of an electric two-wheeler therefore begin to kick in only after 3 years.
- At present customers of petrol two wheeler are not ready to pay the Rs.38000 (90000-52000) extra hoping to get back this 38000 in the running cost advantage and also continue to get the savings thereafter. There are hardly such E-Scooters (less than 5000) on the roads and that too for the last 1 year, it is clear that the prospective customer is not keen to spend that extra money on purchasing hoping to recover it later. The mass shift to electric scooters will not therefore happen unless there are enough numbers on the road and have been used for 4 to 5 years to spread the positive word of mouth of lower total cost of ownership over the life of the vehicle.
- It is imperative that if India targets mass adoption of electric two wheelers with an objective of reducing crude oil consumption and air pollution, the current level of incentive for mid speed scooters (40 to 60 km/hr speed and range 70 to 80 km), the current incentive must not only be maintained but increased to catalyse the adoption of say around 2 to 3 million units before starting to taper the subsidy to zero. Other measures that can help adoption are preferential funding by public sector banks to customers and mandating E-commerce deliveries to convert their entire fleet from a highly polluting extensively run petrol 2 wheelers to zero polluting E-Two wheelers in next 2 to 3 years.