20 percent electric two-wheeler dealers in India exit the business

by Sumantra B Barooah 02 Jul 2019

India wants to go fully electric in two-wheelers (up to 150cc) in the next six years. If that happens, suppliers will get that critical scale to localise EV-related components, and dealers will get the critical footfalls in their showrooms. That, however, at present is a challenge because of which many EV dealers have shut shop. There were around 860 electric two-wheeler dealerships in April this year. The figure was at least 20 percent more. These 20 percent dealers exited during the preceding year or so.

Lack of customers and poor EV charging infrastructure, along with minimal or no finance options, have been the major hurdles in the electric two-wheeler retail market in India. What adds to the dealers’ challenges has been the FAME II scheme which laid out new norms for electric two-wheelers to meet to be able to qualify for incentives.

While the intent of the scheme may have been right, it perhaps created an unintended disruption in the market. Nearly all models have had to undergo technical changes, and work on some may still be underway, before getting certified by bodies like Automotive Research Association of India (ARAI) and International Centre for Automotive Technology (iCAT).

“This process itself generally means two to two-and-a-half months. Then, there will be few manufacturers who were earlier supplying. There were 26 or 30 models and obviously every model has to be certified but this also means a long waiting line. That, perhaps, the policy maker did not realise that they are going to almost stop the business for two months,” says Sohinder Gill, Director, Society of Manufacturers of Electric Vehicles (SMEV).

Disruption in the electric two-wheeler retail business is nothing new. Around six years ago, the market saw a big fall after the withdrawal of incentives by the Ministry of New and Renewable Energy (MNRE).

Gill, who also wears the Hero Electric global CEO’s hat, says he has seen disruptions multiple times, “Not once not twice but thrice in the last 10-12 years and in one point of time, we (Hero Electric) were the only ones standing in that whole crowd while everybody had almost left,”. That could explain Hero Electric’s leadership position in the market which is also struggling for growth. With more players in the fray and increasing buzz around electric mobility, OEMs would hope for more dealers to join the bandwagon, and enjoy a better ride while plugging into electric mobility.

Read more: Definitions and criteria for EV vehicles in FAME II

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FAME II good but not enough, says India Auto Inc at Two-Wheeler Industry Conclave

Timeline for localisation of EV parts to avail FAME II subsidy

EV sales in India cross 750,000 units in FY2019 but FAME II may spoil the run

Tork Motors urges government to increase FAME II electric 2W incentive limit

Heavy Industry Ministry scouts for 'Knowledge Partner' to promote FAME II



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