Rivals unfazed as Ola turns on the heat

by Nilesh Wadhwa 05 Sep 2021

Diego Graffi, chairman and MD of Piaggio India, says he does not feel threatened, especially when it means taking on his company’s established Vespa scooter. “Most customers buy a Vespa because they like its design and the fact that it is a lifestyle product,” said Graffi.

According to him, electric mobility will gain traction in the Indian two-wheeler arena. “The main incentive is government subsidies (FAME II and State EV sops) which are around 50 percent of the ex-showroom price. This incentive is not going to stay forever,” says Graffi.

Piaggio, he continues, has the capabilities but will “introduce something” that is consistent for the next few years. “We do not want to enter the space just because others are doing so. We want to come with our own design, technology and powertrain and not just take something off-the-shelf,” adds Graffi.

As he puts it, it is quite easy to source something from China (like the powertrain for instance) but this is not something that Piaggio is keen on doing in India. On the other hand, the idea is to “provide performance” and meet customer expectations instead of just relying on subsidies that will not be around forever.

The Piaggio India chief is categorical that incentivisation is not sustainable for this business in the long-term. “You have to create a ground of competitiveness where the battery and powertrain costs are more affordable than the ICE (internal combustion engine) scooter,” he says.

Sure, an electric scooter can cost a wee bit more than its ICE counterpart but buyers also know that the operational costs are almost zilch in comparison. “If you calculate the cost over 3-4 years, it becomes affordable to spend a little more initially but will banks be ready to finance electric scooters?" wonders Graffi.

The other “main concern” he sees in electric is localisation of some components . . . the waiting time for parts can sometimes be 4-6 months. It is not just about producing but designing a product that is consistent for the future, he says.

Additionally, these vehicles require specific training of mechanics along with an adequate service network. “You have to create a reputation, network and environment, we have the technology and plan to come to the market with the right product,” says Graffi.

Piaggio clearly is looking at highly advanced technology as part of its strategy for electric scooters whether the brand is Vespa, Aprilia or “any other that we decide to bring in”.

Ola creates buzz but the hard work starts now
Sohinder Singh Gill, CEO, Hero Electric and Director General, Society of Manufacturers of Electric Vehicles  (SMEV), agrees that the buzz created by Ola is quite something else. Clearly, it has made Indians even more aware of electric scooters despite the fact that there are quite a few models on the roads already. Ola, according to him, has done a “wonderful job” in spreading the message aggressively.

Yet, there are some hard realities to contend with in terms of sales where the first half of this fiscal year saw over 30,000 e-scooters retailed. Is there danger of overcapacity with so many players now ready to throw their hats into the ring? 

“I think businesses are wise not to invest too much in the future — some of these are just statements. The market will surely grow and whether it reaches five or ten million units is anybody's guess,” says Gill.

From his point of view, Hero Electric continues to be the largest market player in this space and will endeavour to protect its turf. “So if the market is 10 million, we will have the largest share,” he adds. As for the booking numbers of over 100,000 units for Ola, Gill believes “these figures sometimes lead you in the wrong direction” especially when the downpayment of Rs 500 is refundable.

In his view, this is an over-the-top marketing strategy where the actual booking numbers need to be seen from a planning point of view. “If you are getting 30,000 bookings for instance, can you supply so many scooters? I guess not,” he says. The real test is for any company to “build up their capabilities and capacity around the numbers they talk about”.

Ather Energy’s Chief Business Officer, Ravneet Singh Phokela does not think that there is anything wrong with petrol scooters except that their electric siblings have changed the game. Responding to Ola’s dig at legacy players and rival EV players, Phokela says cars and high-end bikes have seen more innovations than scooters. The last “big change” happened when geared scooters yielded ground to gearless options way back in the 1980s when Kinetic Honda became a fashionable word in the market. “After that nothing fundamental has changed from that point of time,” he says.

Yet, these scooters are “fundamentally good products” by the end of the day and there is really nothing wrong with them. “It is just that electric scooters came and changed the game,” adds Phokela. In the process, customers have taken a big help forward and are quite happy with them.

Ather has clearly been at the forefront of the electric movement in scooters. It recently made its fast-charging tech available to rival OEMs thereby paving the way for a sustainable EV charging ecosystem. Ather is also working on launching an affordable e-scooter on the 450X platform by Q1 of FY2023.

According to Phokela, when a company launches a new product in the market, it is all about “positioning yourself in a certain way”. This can be done in an absolute sense like saying “this is who I am, and this is what I stand for and this is what I bring to the party”. Or, alternatively, “you could position yourself in the context of an industry or a competition”.  Phokela is not intimidated by looming competition in the form of Ola or Simple Energy. “If better specs ensured more sales, the TVS NTorq scores over the Honda Activa but the sales numbers reflect a different picture,” he says. As he explains, people buy into an overall proposition coming from a brand and what it stands for which goes beyond its specs.

“Model specifications are important because they define a basic threshold — but it is about how overall specs come together, how relevant they are for the customers, the experience they get, the ride quality and so on.”

Mumbai-based Earth Energy EV believes that while Ola did an amazing job by launching the Etergo e-scooter, its European design elements may not appeal to customers here since they would be looking for a robust and rugged scooter. “What remains to be seen is how the doorstep deliveries to its over 100,000 pre-orders pan out and how Ola manages the aftersales support for all of them,” says Rushii Senghani, founder, Earth Energy EV.

His concern is that the Ola AppScooter may fail and “take down with it the entire credibility” that the EV startup ecosystem has worked so hard for. The typical Indian customer wants to be able to see the vehicle as much as its supporting service infrastructure. Senghani reiterates that not everything can be done through just making a mobile application and delivering at home since “personal touch and feel” matters a great deal too.

For Nashik-based Jitendra EV Tech, which has diversified into electric two- and three-wheelers, it is all about being close to the customer. Samkit Shah, co-founder, believes Ola’s launch will help the EV segment and one can expect a paradigm shift in the process which will help the market grow.

“Players like us who have an established network with a good buyer base both in the B2B and B2C categories will not get affected,” he adds. The customer’s buying decision depends on the rapport with local dealers coupled with grassroots level activities. Additionally, there must be trained manpower, availability of spare parts and easily accessible service centres. “Brands which assure 3S — sales, service and spare parts – under one roof win the confidence of customers,” says Shah. 

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