How Can EV Companies Forecast Demand When Festive Sales Do Not Reflect Actual Market Demand?

Vehicle sales are often higher during the festive seasons, due to the discounts, financing plans and higher purchasing activity. For an electric vehicle (EV) company, especially one that serves commercial mobility, these peaks and valleys are not necessarily indicative of traction in the market. The true challenge comes in when you wonder if buying gifts during the holidays translates to long-term business value and vehicle use.

This is particularly significant in electric two-wheelers for LMD. Vehicles are assessed by fleet operators and delivery partners for running cost, uptime, reliability and to support their daily earnings in addition to sales records, it is critical to think about some factors like how cars will perform in practical terms when it comes to demand prediction.

Beyond the festive sales spike

Various influences play a role in demand for holiday shopping such as limited time deals and price cut usage for future purchases. Chasing this short-term increase as a new baseline demand may result in overstocking, overproduction or the inability to meet actual demand.

But for commercial EVs, factors other than purchase incentives can influence demand. Fleet operators require equipment to be productive and reliable for the job, with consistent economics and minimum downtime. An increase in holiday shopping can be seen as a sign of opportunity, but manufacturers will need to determine if the vehicles are being driven when the holiday season returns to "normal".

Track utilisation, not just sales

Now EV companies must go beyond the booking and dispatch to know what happens once the vehicle gets to the customer. More accurate insights into continued demand can be gained from several indicators: active vehicle days, kilometers driven, fleet utilisation, battery-swapping frequency, maintenance requirements and downtime.

Fleet operators may want to explore the addition of electric two-wheelers ahead of a holiday delivery surge. The first buy will be based on current needs, but the future will be based on the order volumes, vehicle use levels and the economics of running the fleet after the peak period.

By monitoring these trends, manufacturers can decide if they need to make one-time or recurring purchases. It helps them align their production plans, stock levels and after-sales services with what customers use.

Last-mile delivery changes the demand equation

Quick commerce and hyperlocal delivery are generating new mobility needs along with the growth of e-commerce. Along with the growth of e-commerce, quick commerce and hyperlocal delivery are causing new mobility needs. But when you start to ramp up delivery orders or bring on seasonal staff, it doesn't necessarily correspond to a comparable rise in vehicle sales.

There is a range of options for delivery platforms and fleet operators to respond to increased demand, including fleet extension, better fleet utilisation, leasing and third-party fleet operator. Both methods have varying implications for the demand for EVs.

As such, the manufacturers need to track not only the growth of their delivery networks, but also their fleet replacement cycles, stay active delivery partners, and vehicle utilisation in addition to broader e-commerce related trends. Local variations also come into play, the number of deliveries, the infrastructure and the conditions under which it is used, all affect the appropriateness of electric vehicles.

Companies where their product is electric two-wheelers for the last-mile delivery service, need to know these operating needs to accurately predict demand.

Uptime and battery swapping matter

In the commercial mobility sector, the assessment of a vehicle's worth is determined by its dependability and performance. The charging time, battery availability, maintenance, and downtime contribute to the productivity of the fleet and its operating economics.

Where available, battery-swapping models can help to alleviate the time spent by vehicles waiting to be recharged. Other connected vehicle technologies and fleet-monitoring systems could also offer information on usage and vehicle performance and maintenance.

Fleet operators can gain from using these vehicles, as they will achieve greater efficiency, while manufacturers will obtain important information about vehicle performance in the real world. This will enable them to plan both the product's future development and services, as well as battery requirements throughout the life of the product.

But solutions need to be evaluated in the context of local operating conditions, such as route structure, infrastructure capacity and fleet needs.

Build forecasts around multiple signals

A good demand forecasting model should take multiple factors into consideration, not just holiday sales.

The first is for any company to differentiate between their wholesale dispatches and retail sales and vehicles deployed actively in the market. There are different levels of demand and must be understood as distinct; they're not all the same.

Second, manufacturers need to benchmark pre-festive, festive and post-festive performance to see if any bump in sales is incremental or just a matter of moving the sales forward.

Thirdly, consistent interaction with fleet operators, delivery companies and channel partners can help to reveal planned fleet expansion, replacement cycles and evolving operational requirements.

Finally, scenario planning can assist manufacturers in preparing for various demand scenarios. Companies do not have to expect the holidays to be the same as always, because they will be able to make changes to their production, inventory, and distribution strategies based on the new market conditions.

From sales volumes to continued demand

Festive seasons will continue to be pivotal for customer acquisition, as India's EV market matures. They should not, however, be used as the only means of long-term business planning.

On the other hand, the significant key performance indicators for EV manufacturers are fleet growth, operational economics, utilization, and customer retention. Businesses can accordingly implement the sales data together with operational insights for making informed decisions and conform with the changing customers’ demands.

The end objective isn't to remove uncertainty, but to predict demand more accurately. The most powerful sign of demand is not the high number of vehicle sales over the holidays, but the extent to which they are driven long after the holidays are over.

Bharath Krishna Rao is CEO and Co-Founder, Emobi. Views expressed are the author's own.