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Automobiles: Disruption From e-2Ws Ahead, e-3Ws Near An Inflection Point

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Higher cost of ownership due to regulatory factors, rising fuel prices, reduction in li-ion battery prices, and FAME-2/state government subsidies are factors resulting in narrowing of the price gap between ICE 2Ws and e-2Ws, Motilal Oswal has said in its latest report.

 

"Mainstream OEMs have finally entered the e-Scooter segment, which was so far dominated by startups. We believe that e-2Ws are ready for disruption, particularly urban focused Scooters are at risk of faster electrification.

This has potential to change the competitive landscape of the Scooter segment (market of 5.6m units, Rs 340b revenue and Rs 40.7b EBITDA pool). Similarly, e-3Ws are nearing an inflection point as it is almost at par with CNG 3Ws on a TCO basis. However, traction for e-3Ws would be a function of charging ecosystem as vehicle uptime is of paramount importance in the B2B segment," Motilal Oswal has said in a report.

Automobiles: Disruption From e-2Ws Ahead, e-3Ws Near An Inflection Point

The 2W industry witnessed considerable price inflation due to regulatory changes. The cost to the customer has risen by 25% till Jan-21 from Apr'18 levels. At the same time, the cost of a lithium ion battery continues to fall sharply, with an estimated decline of 24% during the same period.

 

This, coupled with an increase in subsidy under the FAME-2 scheme as well as some states offering subsidies on li-ion battery operated vehicles, has helped to further narrow the gap between ICE 2Ws and e-2Ws.

On a TCO basis, our estimates suggest that e-Scooters offer 10-20% lower cost of ownership (on a per km basis) as compared to ICE Scooters (both 100cc and 125cc). e-Scooter launches from established brands like BJAUT and TVSL would also help establish the credentials of e-Scooters with customers.

Read more about: automobiles
Story first published: Monday, March 22, 2021, 14:12 [IST]
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