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Can electric 2-wheelers disrupt the industry

By Finserv MARKETS - Aug 21,2019
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Electric two wheeler loan

In 2018-19, India’s two-wheeler sales touched an all-time high with over 21 million units sold as of March 2019. This is a 100% increase in sales from the year 2011-12. Two-wheeler vehicles in India typically include scooters, motorbikes and mopeds. Of the two-wheeler sales in FY 2019, the electric two-wheelers witnessed almost a triple-digit growth of 130% year-on-year (YoY) by selling 1,26,000 units compared to 54,800 units in FY 2018. However, in April 2019, the sales of electric vehicles (EVs) have been wiped out, and the automotive industry pundits attribute this slump to the government’s announcement of the second phase of Faster Adoption and Manufacturing of Hybrid and Electric Vehicles – FAME scheme in March 2019 that aims to run all 3-wheeler and 2-wheeler on electricity by completely abandoning the existing internal combustion engine (ICE) vehicles.

Reasons behind the government’s hurried push for EVs

The government is in a hurry to set up stringent deadlines for the transition towards complete electrification of two-wheelers by 2025. The hurry is understandable for the reasons stated below:

  • In its commitment towards Paris Climate Accord, the government plans to pursue its green goals by reducing dependency on fossil fuels and subsequently curb environmental pollution by leapfrogging towards Bharat Stage VI emission standards, equivalent to Euro VI norms.
  • India imports a vast majority of its crude oil from the Middle East region. The geopolitical flux in this region has led to a surge in crude oil prices and a subsequent spiralling of the country’s oil import bills. The rising crude import bills pose huge economic and strategic challenges.
  • The transition towards the EVs is a rare opportunity and is a sign of shifting global order through the manufacturing sector. The auto industry that manufactured ICE vehicles during the last century was dominated by the West and has reached its peak now. Since 2010, China has been at the forefront of the electric vehicle manufacturing revolution and has emerged as the world’s largest EV market. While Indian auto industry has gained from this Chinese transition to EV by grabbing the ICE vehicle manufacturing space, India clearly does not want to miss the global EV bus now by delaying the rules further, since the shift towards EV is inevitable.
  • It is also a conscious effort to give a push to India’s ‘Make in India’ programme that aims to boost the indigenisation of the local manufacturing sector for employment generation.
  • Last but not least, the government is concerned that given the Indian Inc’s tardy acceptance to change, the transition to EV may be too slow if left to its volition.

Possible Challenges of the Policy Impetus

The deliberate policy push by the government towards EV adoption has been met with scepticism by the automotive industry. Most auto industry players foresee a game-changing opportunity but not without disruption. The possible challenges of the move are reflected in the cautiousness shown by the automotive industry as listed below:

  • The move could affect the existing traditional ICE-based industry along with its lakhs of the workforce that’s currently witnessing the worst sales slowdown in its history, and certainly not without collateral damage to the ancillary component industry and unorganised sector that caters to repair and maintenance work of vehicles.
  • Adoption of Bharat Stage-VI norms shall require a massive investment push of about Rs.70,000 crore and there is not enough incentivization for automakers towards this manufacturing push from the government.
  • An EV blueprint was just released by the government in the form of FAME-2 and the stiff deadlines for electric 2 and 3-wheelers are impractical.
  • Lack of proper EV eco-system and infrastructure like certified battery manufacturers, charging stations and the power resources to sustain the ecosystem.
  • A single 100% transition to any technology is not recommended, and instead, norms for a phased transition is needed.

Despite the above challenges, the move towards electric 2-wheelers is imminent and inevitable, and the Indian customers are already inclined towards buying them that can help them save on gas bills and contribute their part towards a cleaner environment. In comparison to four-wheelers, electric two-wheelers are much in demand today for their hassle-free commutation in the busy traffic lanes. Availing a two-wheeler loan to buy your dream e-bike has now gotten easier with Bajaj Finserv Two Wheeler Loan on Finserv MARKETS based on its two-wheeler loan eligibility conditions. As per its two-wheeler loan eligibility criteria, if you have been employed for a minimum of one year and have been residing in the current city for a year now, then the Bajaj Finserv Two Wheeler Loan can be availed online for with minimal documentation on Finserv MARKETS. The two-wheeler loan ensures complete transparency by providing all the details on loan amount, EMIs, and their due dates, and allows early foreclosure and nominal foreclosure charges on the outstanding principal amount of the loan. You can even utilise their dedicated call centre assistance available now in ten languages, in case of any queries on their two-wheeler loan.


The automotive industry remains the heart of India’s manufacturing sector that shall dictate the progress of the country’s economy in the decades to come. In this context, electric two-wheelers seem set to win the battle on the roads but with the country facing an all-time high unemployment problem, managing the fallout of the inevitable transition is pivotal. Failing to address the fallout without providing enough incentives to the affected sections of the auto industry shall aggravate the existing unemployment problem and leave the economy tail spinning into chaos.

However, the recent financial budget presented in July 2019 has some news to cheer for people who plan to buy electric two-wheelers through tax exemption on bike loans. Customers who want to buy an electric two-wheeler and fulfil the required two-wheeler loan eligibility criteria can now avail a bike loan and also a tax exemption of Rs. 1.5 lakhs on the bike loan amount. It has also lowered the GST rates on electric vehicles from 12% to 5% to boost the faster adoption of e-bikes. In addition to these measures, the government needs to incentivise the industry’s efforts enough towards battery costs by drastically slashing the import duties on lithium-ion batteries. This move can further lower the costs of electric two-wheelers substantially.

Also checkout top 5 electric bikes you can buy in India only at Finserv MARKETS.

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