India's Scooter EV Revolution: Top 3 Companies in the Race

The electric vehicle (EV) revolution is coming!

The mobility landscape in India has been evolving swiftly, with electric vehicles being at the forefront of the evolution.

There are several factors at play here.

The growing interest of the nation in the EV space, decreasing cost of technology, alarming pollution levels, growing dependence on oil imports, and increasing government support are all contributing towards accelerating the country's transition to EVs.

Over the last few years, as the government strengthened its focus of building a self-reliant or Atma Nirbhar India, localising supply chains and developing domestic capabilities across the entire EV value chain, from manufacturing to recycling, has become a key priority.

The biggest opportunity for India is its large and burgeoning two and three-wheeler market, which even foreign companies find lucrative.

It's important for India to ride on this unique market opportunity and strengthen its EV capabilities to accelerate growth in the segment.

The Indian car market is governed by two-wheeled vehicles, which account for 75% of the total number of vehicles sold in the country.

This is an interesting data point as India's homegrown two-wheeler majors are fast-tracking their EV plans to capture reasonable market share in the coming years.

Here's a look at the top 3 listed companies in India who have ventured into the two-wheeler EV space.

#1 Bajaj Auto

Bajaj Auto is the world's third-largest manufacturer of motorcycles and the second-largest in India.

Last year, Bajaj Auto's electric scooter Chetak not only marked the company's foray into electric vehicles, but also the resuscitation of the famous Chetak scooter in its electric avatar and the company's comeback in the scooter segment after over 12 years.

In a bid to participate in nascent yet highly active EV space, Bajaj Auto is in the process of forming a separate wholly owned subsidiary.

This will leverage the growth opportunities in the evolving mobility space and will help the company venture into the manufacturing of electric and hybrid vehicles in the two, three and four-wheeler category.

The name of the entity is being finalised and is subject to approval with the Ministry of Corporate Affairs. The subsidiary will have a proposed authorised capital of Rs 1 bn.

Alternatively, Bajaj Auto's premium bike brand KTM is also working on a range of electric motorcycles, which may be introduced in India.

Also, the company is going to set up a new factory near Pune that will churn out KTM, Husqvarna, and Triumph branded motorcycles.

The total capital expenditure (capex) lined up by Bajaj Auto of Rs 8 bn for the fiscal 2022 includes investment set aside for this new facility which is expected to begin production in 2023.

#2 TVS Motors

India's third-largest two-wheeler maker, TVS Motor Company, has plans to invest Rs 10 bn to manufacture electric vehicles.

TVS is working on its 5-25kW two and three wheeler portfolio, with plans to launch all of them within two years.

It aims to have electric vehicles across segments like delivery, commuter premium, high-performance sports, and electric three-wheelers.

The company also aims to launch its range of EV products in foreign markets.

TVS Motor's first EV, the iQube, will go from Bengaluru, Chennai, Coimbatore, Delhi, and Pune to over 1,000 dealerships in major Indian towns and cities by the end of the financial year 2022.

Around then, it will also launch its Creon-concept end, foreseen to be the most advanced electric two-wheeler in India.

TVS will spend up to Rs 6 bn in the year 2022 as capex. Additional outlay of Rs 1.5 bn is also being lined up for the group's finance company TVS Credit.

TVS Motor is involved in the start-up ecosystem as well with a special focus on telematics and connectivity platforms.

#3 Hero MotoCorp

Hero MotoCorp is the largest two-wheeler manufacturer in the world. In India it has a market share of about 37.1%.

Recently, Hero MotoCorp has announced it will be entering the electric vehicle market.

The company will be launching a new electric model next year.

The company will be using its Jaipur (Rajasthan) and Stephanskirchen (Germany) based research and development (R&D) set-ups to develop its own products. Hero MotoCorp plans to spend Rs 8-10 bn during the current financial year as capex.

Earlier, the company had also announced its partnership with Taiwan-based Gogoro Inc to bring the latter's battery swapping platform to India. Furthermore, both brands have also decided to collaborate on electric vehicle development to bring Hero-branded, powered by Gogoro network vehicles to market.

Hero MotoCorp has already entered two-wheeler EV in the form of investments in a Bengaluru-based EV start-up Ather Energy.

Ather Energy is an EV company that manufactures electric scooters. It has established one of the fastest EV charging infrastructure, Ather Grid, which was built and designed in India.

Cab hailing company OLA has also entered the two-wheeler EV space. Ola Electric, India's only electric vehicle unicorn startup, was launched in 2019.

It aims to work with driver-partners, cities, vehicle manufacturers, and battery companies to make sustainable technologies cost-effective and viable in daily mobility.

The company ran a pilot in Nagpur involving charging solutions, battery swapping stations, and deploying vehicles across two, three and four-wheeler segments.

Lithium-Ion battery: The backbone of EV industry

Lithium-ion (Li-ion) cells are considered the heart of EVs.

The rapid penetration of electric vehicles in India will drive the need for lithium ion battery manufacturing in the country.

Li-ion batteries act as the primary storage option for electro-chemical energy. These batteries are rechargeable and contain Li-ion as the key component of electrolyte.

The Li-ion battery manufacturing industry in India is at a nascent stage at present. However, India holds the potential to emerge as the key manufacturer of Li-ion batteries over the next few years.

Key players like Amara Raja Batteries, Exide Industries, and Tata Group are now accelerating plans to produce Li-ion cells.

To know more about EV battery makers, please read our article on 5 Indian EV battery makers to watch out for.

How can you ride the EV trend?

India's EV revolution is just getting started. As this economic boom kicks into high gear, it will create many beneficiaries.

You too can profit from this megatrend in the stock market.

Equitymaster's Co-Head of Research, Tanushree Banerjee, has been watching the EV space closely and has identified the key to profit from this revolution.

To know more, you can check out her recent edition of Profit Hunter: The Key to Profit from India's EV Revolution.

Meanwhile, if you would like to invest in the EV space, Richa Agarwal, editor of the smallcap recommendation service, Hidden Treasure, recently recommended a proxy play on India's EV revolution.

Subscribers can read the report here.

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To know what's moving the Indian stock markets today, check out the most recent share market updates here.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...