Surge in Electric Two-Wheeler Penetration Over Recent Months

The electric two-wheeler market has shown notable improvement in penetration over the past two months, while electric three-wheelers experienced a slight decline in June this year.

"Except for March, when pre-buying led to a surge, EV penetration had been decreasing this year. However, the last two months have shown a positive trend compared to early this year," said Kumar Rakesh, Analyst-Auto at BNP Paribas Securities India Pvt Ltd.

Following a significant reduction in incentives in April 2024, the penetration and volumes of electric two-wheelers have rebounded in the past two months. EV penetration in the two-wheeler segment has steadily increased month-on-month, reaching 5.8 percent in June from 5.0 percent in May.

"We expect this trend to continue and for electrification to recover gradually in the coming months, as more clarity on the new incentive policy (likely FAME III) emerges and OEMs launch more lower-priced models," Rakesh added.

In contrast, the electric three-wheeler segment saw year-on-year volume growth in June but a month-on-month decline. Penetration also dropped slightly. "The industry does not seem significantly impacted by the delay in FAME incentives," noted Rakesh.

The penetration of electric three-wheelers is expected to improve in the coming months as market leaders expand their networks.

Among states, West Bengal saw the highest month-on-month increase in E3W penetration, while Gujarat experienced the most significant decline. Bajaj Auto has been ramping up its E3W sales in multiple cities, contributing to overall industry penetration growth.

Mahindra & Mahindra led the electric three-wheeler market with a 9.2 percent market share in June 2024, up from 8.3 percent in May 2024. Bajaj Auto, the second-largest player in the segment, also increased its market share to 4.9 percent from 4.2 percent.

According to sources, the upcoming budget is likely to announce a Rs.10,000 crore outlay under the FAME III scheme to support electric two and three-wheelers and electric passenger vehicles.