This paper attempts to evaluate the adoption strategy in the short to medium term to drive demand for the electric vehicle in urban transportation markets in India.

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Strategy for Adoption of Two-Wheeler Electric Vehicles
in Urban Markets of India
Rajesh Gusain, Vivek Menon, Yash Khanna
PGPX 2018-19, IIM Ahmedabad, Gujarat 380015
I. Abstract
Electric Vehicles (EVs) are attracting significant attention across the globe as it compliments other
global clean energy initiatives. Indian government is progressively supporting electric mobility
initiatives, the Nation Electric Mobility Mission Plan (NEMMP) published in 20131 showed the
country’s commitment for sustainable transportation. The purpose of governmental initiatives in
this sector is to act as a catalyst to help the local industry build capability and provide subsidies
to induce demand. However, milestones set by NEMMP are likely to be missed as the
implementation of policy decisions, availability of relevant urban infrastructure and acceptance
of electric transportation have been slower than what was expected. This paper attempts to
evaluate the adoption strategy in the short to medium term to drive demand for the electric
vehicle in urban transportation markets. As the highest Net Present Value of electric mobility
initiatives was in the two-wheeler industry (per NEMMP), this paper will focus its research for
selecting criteria of competitiveness based on two-wheeler market segment. Specific
requirement of infrastructure availability in urban areas, which is a key requisite for the adoption
of this technology in the short to medium term, are also discussed.
Keywords: Electric vehicles, Customer value, EV Infrastructure, Government Policies
II. Indian EV Market and Two-wheeler market
India is the fourth largest carbon emitter and one of the largest automobile manufacturers in the
world, and is also a signatory of the Paris climate treaty2. As part of the treaty, India has
committed to reducing 35% of its 2015 carbon emission levels over 15 years by 2030. Moreover,
the Indian balance of trade is adversely impacted due to fluctuations in the prices of crude. A
drive towards electric vehicles (EVs) will not only help India meet its global commitment but also
achieve the strategic objective of reducing its trade deficit.
The Government had unveiled the National Electric Mobility Mission Plan and planned to
introduce 6-7 million EVs in the country by 2020. This aggressive target has not been met but the
Indian Government remains ambitious and had in 2017 set a target of 100% Electric Vehicle
market by 2030 that was later revised to 30%. While the Indian government's position in global
climate pacts and communication to the industry in the country seems clear, the recent flip-flop
on the national EV policy has deterred international EV players from entering India.

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Not deterred by this seemingly challenging environment, the potential in the Indian market has
driven multiple new players to establish a first-mover advantage in the two-wheeler EV market.
As per the latest CRISIL report3 on two-wheeler industry in India, the sales of two-wheelers across
India has been growing steadily for the past several years and total sales volume was around 20
million in 2017. Growth in scooters in the 2018-19 period in India is estimated to be 6-8% to reach
a total value of close of 7 million vehicles. Increase in fuel prices is expected to raise the cost of
ownership of two-wheelers by 4-6% in FY19. Maintenance and insurance form only 3.5% of the
total cost of ownership of vehicles over their lifespan and hence don’t significantly impact two-
wheeler purchase decisions. New BS VI emission norms will come into force in FY21 and may
impact the growth of two-wheeler industry due to increased costs. These conditions seem
appropriate for growth of two-wheeler EVs in the medium term in the India market. There are
several startups in this segment such as Ather, Artem, Okinawa, Twenty-Two Motors and Tork
Motorcycles who are trying to make inroads in this marketplace. On the other hand, older players
such as YObykes maker Electrotherm, Ampere Vehicles, Avon Cycles and Oreva e-bike maker
Ajanta Group are advancing launches, after keeping them on the backburner because of poor
infrastructure, low acceptance and lack of government support. Even major OEMs like TVS Motor
have gone back to the drawing boards to speed up their hybrid and electric scooter rollouts4.
III. Adoption challenges of two-wheeler EVs
As with the adoption of any new technology, two-wheeler EVs face stiff competition of existing
incumbent players in the Indian two-wheeler market. Lack of familiarity with new products and
yet to be proven technology are some of the traditional hurdles that new firms will face in the
current transitional market. On evaluation of the power and interest of different stakeholders
(Figure 1.) in this EV market, certain key challenges have emerged which are hindering adoption
of two-wheeler EVs in the Indian marketplace.
Figure 1. Stakeholder analysis for the two-wheeler EV manufacturers

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Customer awareness about EVs needs to increase not only by marketing efforts but also providing
greater value compared to traditional ICE vehicles. It must be recognised that traditional
manufacturers and incumbents have interest in this industry and some have already made
headway in product development. Government policy will play a key role in deciding technical
specifications both for EV technology and charging infrastructure, while investors and
incumbents will play a key role in influencing these decisions. These decisions will have to be
closely followed to ensure sustained business continuity. Lastly with improvement in battery
technology and development of infirm capabilities, it can be anticipated that bargaining power
of suppliers will reduce over the medium to long term horizon.
i. High Acquisition Costs
Battery costs of mass manufactured EVs form more than half of the total vehicle costs which pose
a barrier to entry for consumers to shift to electric two-wheelers. In the long term by 2030, these
costs are anticipated to reduce to about 20% of the total EV cost. Sustained reduction in falling
costs require continuous improvement in battery technology and investment in creating large
manufacturing setups to gain economies of scale5.
ii. Long Charging Time
Another major issue with the EVs is the need for long charging times. A standard two-wheeler EV
requires 3 to 4 hours of charge for the 1-2 kWh battery pack with a single phase 5 Amp charger.
The long charging hours are a clear disadvantage vis a vis ICE vehicle which requires not more
than 10 min of refueling time.
iii. Low Capacity and Limited Driving Range
Two-wheeler EVs are suited for intra-city driving as they have limited driving range. A higher
range two-wheeler leads to increase in EV price gap and can thus be easily substituted by a
traditional ICE. Firms are setting up charging infrastructure to tackle the range limitation and are
exploring faster charging mechanisms for this purpose. However, rate of charging also has
bearing on longevity of battery life and needs to be accounted for when deciding charging
criteria6.
iv. Uncertain Regulatory Environment
EV technology is evolving and its grow is limited by availability of both talent to research new
technologies and raw material. Charging infrastructure availability is limited in cities and first
mover advantage would be helpful in shaping policy. However, this also poses a big risk as policy
decisions will shape charging infrastructure requirements, its technical specifications and
distribution channels. As with all other mass market distribution systems, suppliers have high
bargaining power and a regulated market may well result in oligopolistic market.

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IV. Comparison between existing and upcoming two wheelers
Major established Indian two-wheeler manufacturing companies along with multiple startups are
entering the EV two-wheeler segment. They are also introducing hybrid systems, however, since
hybrid engines do not face same issues as the “pure” electric vehicles, they fall out of the scope
of this paper and haven’t been considered in the comparison.
Company Product name Expected
Launch year
Range Top speed Price
Ather Ather 450 2018 75 km 80 km/h ₹ 1,25,000
Ather 340 2018 60 km 70 km/h ₹ 1,10,000
Twenty-Two
Motors
Flow
(1 battery)
2018 80 km 65 km/h ₹ 60,000
Flow
(2 batteries)
2018 160 km 65km/h ₹ 90,000
Piaggio Vespa Electrica November 2018 100 km N.A. ₹ 90,000
Honda PCX Asian markets 2018
India- TBD
N.A. 96 km/h N.A.
TVS Creon 2019 80 km > 60 km/h ₹ 70,000
Table 1. Current companies and offerings in the two-wheeler EV segment (sample set)
The sample set in above table is representative of the two-wheeler EV segment that comprises
of both established brands and newcomers. Data has been collated on basic criteria to get a sense
of the spread of product offerings available in the market. Customer adoption rates are driven
by multiple such criteria and hence we are focusing on solutions that solve the pressing
challenges mentioned in the above sections.
V. Key business features to drive adoption
The development of the two-wheeler EV market is dependent on the improvement of battery
technology and the associated charging infrastructure. Firms with first mover advantage in this
technology might have significant advantage in deciding technical specifications and influencing
EV policy. However, owing to the nature of the charging industry with standard electricity
distribution channels and upfront capital investment, it is likely that the charging infrastructure
industry will become a natural monopoly and may eventually lead to regulation. Tieing up capital
in charging infrastructure, thus is risky. We suggest following M.A.P.S. strategy (Figure 2) to
explore growth opportunities:

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Figure 2. Proposed M.A.P.S. strategy for two-wheeler EV adoption
i. Modular Battery Pack
Range anxiety is another area of concern for potential customers. A standard two-wheeler EV
requires 3 to 4 hours of charge for their 1-2 kWh battery pack with a single phase 5 Amp charger.
The long charging hours are a clear disadvantage vis a vis ICE vehicle and act as major deterrents
to the adoption of electric vehicles.
Two-wheeler EV firms should tie up with existing refueling stations and offer the facility of battery
swapping. Battery swapping involves replacement of the discharge battery of a vehicle with a
fully charged battery. This would reduce the time spent at a charging station comparable to the
time spent at a refueling pump for an ICE vehicle.
The development of a modular battery is essential for the battery swap strategy. The current EV
manufactures will have to focus on proposed battery swap as a source of competitive advantage
and design EVs that support such a functionality. This may have to be done in partnership with
battery manufacturers, the scope of which can be used widespread – not only in their own
vehicles but also other electric vehicles.
Modular battery business models also open up the possibility of providing battery swapping at
preferred location. This would further strengthen value proposition to customers instill
confidence in providing required mobility when required.

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ii. Alliances
Firms should explore alliance strategies to co-develop EV technology. Innovative designs that
make best use of power to weight ratio to improve vehicle performance will enable the industry
to capture customer interest and imagination. Such alliances should not only be limited to vehicle
design but also battery technology which is an essential product component.
Lack of internal capability and talent is leading most players to partner with suppliers for electric
batteries. Firms can use such ventures to explore backward integration capabilities in the
medium term to develop battery technology which would not only make cheaper but also
efficient batteries with high energy density which are suitable to their own vehicle designs.
Partnering with other two-wheeler EV manufacturers for this backward integration will ensure
steady supply of batteries and will be a mutually beneficial alliance strategy. Partnering EV
manufacturers would not have to make the complete upfront investment in setting up
manufacturing capability thereby lowering the entry barrier to the EV supplier market. It would
of course allow firms who’ve setup early manufacturing capabilities to leverage the economies
of scale to generate sustainable profit. This scenario is akin to big data centres that have been
set up by few players who over time have built global reach.
iii. Product Service System Model
Today’s Two-wheeler vehicles have high acquisition cost. Table 1 indicates the comparison
among different two-wheeler EVs and their prices are at the higher end of scooter segment. As
EV mobility is a new emerging segment, potential customers may not fully realise the perceived
value of an electric vehicle. High acquisition cost may deter the consumer from taking the
purchasing decision.
To address the above-mentioned issues, we suggest the development of modular batteries and
application of Product Service System (PSS) Model - specifically the use-oriented category (Tukker
2004)7 of the PSS model.
Value proposition offered by PSS, part of the overall business model, is the manufacturers intent
to sell integrated products and services as opposed to products alone (Goedkoop et al. 1999)8. In
the proposed model, the customer leases the battery from the EV manufacturer- who retains the
ownership of the asset. Disassociating the battery price from the EV vehicle price would decrease
the upfront price of the product making it lower than or comparable to the purchase price of a
similar two-wheeler ICE Vehicle. The customer would pay a monthly/quarterly leasing fee for
this service.

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iv. Added Services
Most new firms are providing additional diagnostic services along with the standard product
offering. These diagnostic services help in identifying usage patterns, real time monitoring of
component health, thus aid improved maintenance and insurance services which are lower in
cost subject to driving pattern of consumers.
Another area to explore is the accessories market such as smart helmets, which connect with
scooter and provide features that help in navigation through GPS with minimum distraction.
These accessories complement the connected ecosystem and make the customer value
proposition stronger.
VI. Conclusion
The two-wheeler EV market is currently in its nascent stage and is likely to witness high growth
in the medium term. With increasing interest from entrepreneurs, investors and traditional
OEMs, the EV market needs to build competitive advantage to grow rather than depend on the
altruistic clean energy rhetoric. Implementation of some of the suggestions mentioned in this
paper should allow manufacturers to generate consumer interest and gain mileage. Charging
infrastructure creation has intentionally not been recommended as this is one area which has
higher regulatory uncertainty and may provide a low return on investment. Forming alliances
across the spread of stakeholders will be key in gaining access to talent in technology so as to
maintain competitiveness in the market. In the crowded marketplace, firms entering this market
should try to implement strategies that not only give short term first mover advantage but also
ensure sustainability over the medium term considering that this is a capital intensive industry.
We hope that the suggestions given in this paper will enable entrepreneurs and investors to look
at alternative business models to support their endeavour in becoming market leaders in the
two-wheeler EV segment.

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