HMSI: Natural adoption of EVs still a few years away

Honda Motorcycle and Scooter India (HMSI) is gearing up to launch its first electric scooter in our market. “We will have our own (EV) model in the next financial year. In FY2023, you will see Honda two-wheelers coming into the EV space,” said YS Guleria, director, sales and marketing, HMSI at the Two Wheeler Week organised by our sister publication Autocar Professional. However, he added, “We are looking at our entry into the EV space, but we are not looking at very high volumes, as of now.”

• First Honda e-scooter to launch between April 2022-March 2023
• Company not aiming for high volume sales
• Market isn’t ready for mass adoption of EVs, believes Honda

Switch to electric not happening at expected pace

There has been a spurt in electric two wheeler sales in recent times. As per a sales analysis by Autocar Professional, 29,288 high-speed electric two-wheelers were sold in the country in the first six months of 2021, which is much more than the 25,598 units sold in the whole of last year. However, Honda believes that this is not good enough.

“Despite the government’s initiatives to push early adoption of EVs, there are still challenges in the market and we are far away from a stage where there is a natural footfall of customers looking forward to EVs,” commented Guleria.

He continued, “There are inquiries, but if you say that there will be an overnight shift (to EVs), or it is going to happen in the next two-three years, then we have a different opinion, being the scooter market leader in the country.”

To put things in perspective, compared to the almost 30,000 units of high-speed electric scooters sold in the first half of 2021, the industry saw sales of 67,57,190 units of conventionally-powered two-wheelers, translating into a miniscule share of just 0.4 percent for the EVs.

Still, the younger players, who are completely invested in electric mobility, are taking an opposing stance on the subject. For instance, Ather expects 40 percent of the scooter market to be electric by 2025. Ola Electric is another player that is bullish on EV targets.

Challenges to EV adoption

Many have attributed the recent spike in EV sales to the hefty subsidies provided by the central and state governments. Industry veterans believe that the switch to electrification will happen in earnest only when EV sales are able to sustain even in the absence of government sops. However there are a number of challenges that need to be overcome first. “For now, there are subsidies. So, the natural adoption of EVs is still years away,” opined Guleria.

Commenting on issues slowing down the progress of EVs, Rakesh Sharma, Executive Director, Bajaj Auto, said at the two-wheeler conclave, “There is a lot of charging anxiety. In urban areas, many people park their two-wheelers far away from where they reside, and there are no charging systems. It's not an insurmountable issue, but till the time it isn’t overcome, it will impede the progression of electric vehicles.”

Another pain point with EVs is their high sticker price, driven largely by expensive batteries. “Battery costs have been coming down, but since the demand is shooting up, supply is not able to catch up. Because of the demand-supply imbalance and the semiconductor crisis, there has been, sort of, a halting in the fall in battery costs. This means that electric two-wheelers are still very, very expensive,” said Sharma. 

He continued, “If we have another 1-2 years of very small decline in battery prices, then how will the subsidy pan out? If the subsidy’s withdrawn, what will happen to the demand? And if the demand doesn't grow, then what will happen to all the investments which companies are making?”

The senior Bajaj executive said that though he was convinced of electrification, it didn’t seem like mass adoption would happen soon. Echoing views similar to Honda’s Guleria, he said, “It's going to take time, so we better prepare ourselves for the long haul.”

Also see:

Honda files various EV patents in India

Honda PCX electric scooter patent registered in India

Honda announces new plans for electric bikes and scooters

India's state EV policies: how do they compare?

Electric two-wheelers now more affordable due to FAME II revision