Two-wheelers have long been a popular mode of transport in Asia, and the rising tide of electrification has seen electric two-wheelers (E2Ws) undergo a prodigious rise in popularity. China is currently the runaway leader within the E2W market, but a different Asian economy is set to overtake it in the coming years. IDTechEx’s report “Micro EVs 2025-2045: Electric Two-Wheelers, Three-Wheelers, and Microcars“, finds that India will become the next major powerhouse for E2W production and sales, contributing to a fast-growing micro EV industry valued at US$90 billion globally by 2045.
Key drivers for growth of Indian E2W market. Source: IDTechEx
China rules the industry today
As of today, China is the undisputed leader in global E2W sales. Over 85% of all sales in 2023 were in China, and E2Ws have attained mainstream acceptance within the country. It began adopting the technology as early as the 1990s and has maintained its head start ever since. China is also home to many of the world’s largest E2W manufacturers – such as Yadea and Niu – producing low-power electric mopeds that are affordable to the everyday consumer and well-suited to the country’s dense urban areas.
However, the IDTechEx report highlights several trends that suggest a less promising future for the Chinese E2W sector.
The Chinese market is stagnating
The country’s domestic market has long been buoyed by a large population and rising income levels as it experienced rapid growth in the late 20th century. But China’s demographics are fast changing, and it now faces a declining and aging population. At the same time, individual wealth and consumer purchasing power have risen significantly. Both these factors are pushing people away from purchasing two-wheelers and towards larger forms of transport.
In fact, this doesn’t only impact two-wheelers, with other micro-EV types like three-wheelers and microcars also feeling the burden as larger sedans and SUVs replace them. For these reasons, the “Micro EVs 2025-2045: Electric Two-Wheelers, Three-Wheelers, and Microcars” report predicts that the Chinese market will stagnate in the short-term before undergoing an eventual decline, as cars pick up steam and the addressable customer base for two-wheelers continues to shrink.
India on the up
Compared to the Chinese market, where over half of moped sales are EVs, the Indian E2W market is far more nascent, less saturated, and has greater room for future growth. IDTechEx’s report finds that regulatory, technological, and market factors work together, creating an ideal environment for widespread adoption.
India is one of the most polluting countries in the world, and many of its cities regularly have unsafe levels of air pollution. Over 70% of emissions come from vehicular sources, and in a market where two-wheelers sell much more than passenger cars, people are now turning towards E2Ws in their fight against air pollution.
High fuel prices also have a role to play here. While fuel prices in India have been quite volatile in the post-pandemic years, electricity prices have remained fairly stable, offering customers a cheaper and more reliable total cost of ownership.
The rise of e-commerce will drive greater demand for E2Ws too. India’s fast-growing population, rising income levels, and modernization has created a strong e-commerce sector. Many companies in this space have their own environmental commitments and sustainability goals, with the electrification of their two-wheeler fleets going a long way to achieving them.
OEMs and governments responding
Local Indian OEMs, along with federal and state governments, are paying attention to the rise in E2W demand and responding accordingly.
India is home to many historic and established producers of combustion engine two-wheelers, which have long been popular in the country. However, many of these companies – including market giants like Mahindra, Bajaj, and TVS – have embraced electrification and have either produced or plan to produce, E2Ws. The country is also home to a burgeoning E2W startup industry, with relatively new OEMs such as OLA Electric, Ather, and Ampere acquiring significant funding and being market leaders.
Meanwhile, the Indian government has been much more proactive than most at creating a beneficial policy environment for the growth of E2Ws. Its biggest commitments have come in the form of subsidy schemes – such as the FAME II subsidy program, which was followed up by the EMPS program. The IDTechEx report “Micro EVs 2025-2045: Electric Two-Wheelers, Three-Wheelers, and Microcars” finds that these programs were among the most generous of any scheme around the world, effectively making E2Ws cheaper than combustion and contributing massively to a quadrupling in domestic E2W sales.
The government also has separate schemes aimed at spreading charging infrastructure across the country, while 27 state and local governments have their own subsidies for E2W purchase or charger installations. These policies have spawned partnerships between OEMs and charging startups, which have benefited the wider E2W customer base.
Finally, there are some areas where OEMs and the government have worked together to reshape India’s E2W ecosystem. Because the country is not a major battery producer, Li-ion cells have to be imported by domestic OEMs. This is a major bottleneck for the market, with imports coming at a higher cost and logistical difficulties, raising prices of E2Ws. In response, many companies are instead looking to build out their own Li-ion production capacity. OLA Electric is establishing gigafactories in India meant for the production of their E2Ws, while Mahindra is considering the same. The Indian government is incentivizing this transition through additional financial backing. It has made over US$2 billion available in incentives for domestic Li-ion cell production, which will accelerate the growth of E2Ws in the long-term.
“Micro EVs 2025-2045: Electric Two-Wheelers, Three-Wheelers, and Microcars” highlights in greater detail the drivers behind India’s future E2W successes. It also provides up-to-date sales trends, key player and product benchmarking, and critical market developments for India and all other key micro-EV markets. Granular 20-year forecasts broken down by region, vehicle type, power, and battery chemistry lay out how the global market will grow to US$90 billion by 2045.
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