Electric two-wheeler manufacturers are sitting on idle capacities after demand in FY23 took the slow lane. Sales volume fell well short of targets, forcing companies to relook their production plans and postpone expansion of their market reach.
“All manufacturers are significantly lagging behind in their projected output. We have barely got any fresh orders for the past six months. The withdrawal of FAME-II subsidies has compounded issues for the industry,” a lithium-ion battery supplier told FE.
The electric two-wheeler (e2W) market ended FY23 at around 700,000 units, 30% short of the projected one million units set by NITI Aayog, the apex public policy think-tank of the government. The numbers are sourced from the Vahan portal, maintained by the ministry of road transport and highways.
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TVS Motor Company, the country’s second-largest e2W maker, had announced plans to ramp up production of its only electric scooter, iQube, to 25,000 units a month by March on the back of a claimed robust demand for the product. However, the Chennai-based company ended March at under 15,400 units.
Hero MotoCorp has not added any more cities beyond the three it started with for the sales of its debut e2W. The company had committed to add eight cities to its initial brief tally comprising Delhi, Jaipur and Bengaluru. The new cities were to be added starting December 2023.
Hero MotoCorp achieved a limited breakthrough in the three markets where it started retailing in December preceded by bookings in October. As per Vahan data, the company clocked an average of just 222 units every month in four months of its e2Ws, which it sells under the Vida brand.
Less than five months ago, Hero MotoCorp-backed Ather Energy inaugurated its second manufacturing plant, which pushed its annual capacity to 420,000 units or 35,000 units a month. But its average monthly retail volumes in the last four months has been under 10,000 units.
Emails sent to TVS Motor Company, Hero MotoCorp and Ather Energy for comments remained unanswered at the time of going to press.
The government stopped subsidy support for several e2W makers in FY23 following allegations of misappropriation of funds by some companies. The government ordered audits of business transactions, including ascertaining the origin of all vehicular components and price at which the vehicle was sold to the buyer.
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As per estimates, the government has not released subsidies totalling more than `1,500 crore to the industry, even as the vehicle makers continue to sell their vehicles at a post subsidy.
Five month ago, e2W market leader Ola Electric had plans to ramp up annual production capacity to 1 million units, translating to a little over 83,000 units a month, by November 2024. While the ambitious target means that the capacity ramp-up is more than the current entire monthly sale of the e2W industry, market watchers say that the slowdown in demand will pose a challenge for the market leader in meeting the target.
