This article will discuss about the driving forces for the market growth, and industry updates on the key regional markets as well as promising applications.
Two wheelers are the most electrified road transport segment today, and are considered the most cost competitive road transport.
The global electric two wheelers market is on the rise with market value up from US$ 17.69 billion in 2021 to US$ 58.66 billion by 2032, at a CAGR of 11.6%. Electric bicycles currently account for the majority, more than 67% share in the sales of electric two wheelers globally.¹ Electric scooter and motorcycles are also fast growing because of worldwide governments’ initiatives to reduce carbon emission and meet zero emission goals.
Driving forces behind electrification of micromobility
McKinsey research indicates regulatory push (policies designed to generate demand) and consumer pull (innate features or sales models that attract consumers) are key factors to drive electrification of micromobility.²
- Environmentally friendly regulations and incentives
Many of the regulations favor EVs, since they reduce the carbon footprint by 65 to 70 percent, compared with internal-combustion-engine (ICE) vehicles. In China, for instance, the government banned the sale of ICE scooters in 2011.
- Falling battery prices and lower total costs of ownership
Battery costs typically represent around 40 percent of the bills of materials for EVs, and prices are expected to drop to less than $130 per kilowatt-hour over the next few years. That shift will decrease the total cost of ownership and potentially stimulate demand, especially among B2B buyers and members of the lower or middle B2C segments.
- Emergence of innovative go-to-market models
Some new models, such as those involving battery-as-a-service (BaaS), could reduce up-front acquisition costs for E2Ws and E3Ws. In addition to the lower prices, consumers may appreciate the convenience of BaaS, since emerging battery solutions allow refueling in under one minute.
- Appeal of high-end connectivity
More and more players are developing and launching connected E2Ws worldwide. For consumers in the premium-2W segment, a high-end EV with connectivity may be much more appealing than a standard ICE vehicle.
Besides the advancement of battery technologies and government regulations, sharing service, on-demand deliveries and recreation will also continue to drive the demand and sales of electric two wheelers over the next few years. In addition, COVID-19 has accelerated a trend towards individual mobility solutions because people are avoiding public transportation like subways and other shared-mobility solutions.
For instance, tours like “Cycling Holidays” are driving e-bike market in Europe because e-bikes are popular adoption for tourists when visiting sightseeing sites and the countryside.³ In the Middle East, the demand from e-commerce delivery services and growing popularity of two-wheeler sporting activities are two major driving forces of the market growth. According to TechSci Research report, the high demand for premium motorcycles among the youth population and the growing disposable income of the consumers are driving the demand for high power capacity two wheelers for off-road and recreational activities like racing and traveling. They like new innovations to upgrade the existing version of motorcycles like improvement in fuel efficiency and mileage and integration of Bluetooth speakers, air-cooled engines, and other advanced technologies. Based on engine capacity, above 500cc segment led the market in 2021 with a market share of 35.37%, and the segment is expected to maintain its dominance in the next five years.4
Rising Demand for Sharing Services
Worldwide governments are promoting inner-city car sharing services via eco-friendly electric two wheelers to address environmental concerns and to solve the “Last Mile Problem” of public transportation. It could encourage more people to commute via public transportation like subway, bus or train, and thus to further ease traffic congestion. Shared mobility changes the rider’s behavior from ownership to usership, and also led to a rising demand of electric two wheelers due to their convenience and lower cost of operations.
Connectivity enables better rider experience and safety. B2V (bike-to-vehicle) communication allows vehicles to exchange information regarding vehicle type, speed, acceleration, position and direction of travel. One of the best benefits is to effectively avoid car accident by alerting vehicle drivers.
WeMo Scooter launched a smart vehicle rental and sharing service integrated with IoV technologies that can work with the smart city infrastructure and provide affordable green mobility. When the vehicles were equipped with different sensors, for example PM2.5 detection, pothole detection, flood alert or if it comes with a dash cam plus a virtual map, the real-time data and insights could be “shared” to the governments, fleet operators or neighboring vehicles for providing services or notifications to keep riders safe, remind them to wear raincoats or recommend different routes to avoid traffic jams in some densely populated areas.
Growth is mainly in Asia where two-wheelers are prevalent
APAC region leads the regional market, and EVs are getting a boost from recent government regulations and incentives to reduce emissions.
McKinsey’s research says that China is the largest electric two wheeler market, and accounts for around 30 percent of the global market for small-format EVs. What’s more, more than 80 percent of 2Ws in China are electrified, making it the dominant market by far in that category. The electric two-wheeler bicycle segment leads the market, with the largest proportion of 93.1%. 66.5% of personal purchase of electric two-wheelers is driven by old product replacement, and 19.6% is from new user demand. Delivery riders are increasing due to online retail and on-demand takeaways.5
ASEAN like India, Indonesia and Thailand are promising countries with strong government incentives. Electrification of two-wheelers in India is seen as an opportunity to cost effectively electrify at scale, as it is the largest two-wheeler market in the world. India’s Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme aims to convert motorcycles of 150cc or less to 100% EV by 2025. To increase the purchase incentive, in the modifications to the FAME II scheme, extended to the end of March 2024, India government increased subsidies for electric two-wheelers to 15,000 per kWH of battery capacity, with 50% increase and changed the maximum subsidy amount from 20% to 40% of the vehicle price, to narrowing the price gap with internal combustion engine vehicles.
Indonesia started to produce electric motorcycles this year and aims to reach 40% of in-house manufacturing in 2023, and set the production target of 2.45 million electric two-wheelers by 2030. The Minister of Ministry of Energy and Mineral Resources announced in June 2021 that all new two-wheel vehicles sold in Indonesia will be EVs by 2050.
As the largest automotive production center in ASEAN, Thailand has announced a 30/30 policy, aiming to have electric vehicles (EV) account for 30% of its automotive production by 2030. National Electric Vehicle Policy Committee set a ZEV production target of 360,000 electric motorcycles per year by 2025 and 675,000 by 2030. The government also issued new incentive packages to encourage EV purchases, including an 18,000-baht subsidy for electric motorcycles from eligible car producers between 2022 – 2023.