Charging infrastructure and battery costs are major challenges faced by Indian electric two wheeler market

As per recent proposal by NITI Aayog’s, there should be a ban on sale of internal combustion engines (ICE) two wheelers with an engine capacity less than 150cc which makes around 85% Indian two wheeler industry. 100% ban on ICE engine can unsettle the prevailing business plans and scenarios. Indian two wheeler industry is currently witnessing lot of starts ops in this space. Electric two wheelers presently accounts for hardly one percent of overall two wheelers industry with around 126,000 sales volume.
With FAME II program, the government has sanctioned $1.2B allocated towards subsidies and $140m for developing charging infrastructure. The total subsidy amount is expected to provide coverage up to 1 million two-wheelers and 50K three wheelers. Under FAME I, city speed electric two wheelers were given a subsidy of Rs 22,000, however, under the second phase, the government has fixed the incentive at a uniform Rs10,000 per KWh for all vehicles. Subsidies for escooters, thus, are now in the range of Rs15,000 to -25,000 which makes it 15-20% of vehicle price.
High battery cost is the major factor behind the cost of electric two wheeler making around 40 to 50% of the total cost. Indian climate including temperature is another factor affecting the market.
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