Thread by @Involab1

A deep dive 🧵🧵 on electric 2W industry as the adoption grows and fund flows. Enjoy!

#e2W #ElectricVehicles #automobile

India is known to be a sleeping giant for electric 2W market. After all it represents more than 1/3rd of global demand and still expected to grow the fastest at 7%+ CAGR for next 5Y by market researchers. Well the giant seems to be awakening this year.

Kudos to Delhi to forcing logistics players to adopt e2W faster. Because in the next 5Y, India's ecom and last mile food delivery size is expected to grow at 27% and 50%+ CAGR respectively..

..which means delivery executive hires could be 30lac (8lac in metros in FY20 grown at 30% YoY). Additionally, domestic market size of scooters is ~40lac which will need replacement too - got a fare bit of idea of the demand size here; but how are the supply fared?

India bought 1.4 lac units of e2W in 2021 which is just 1.4% of 2W sold. Hero electric seems to be leading the race. But I tend to believe that this is just a trailer while movie releases in 2022 🙂

Ola has 1lac+ of orderbook but delivery issues given chip shortage. Waiting period is big and they make low end customers wait for 10m now - funny how it resembles Tesla 5Y back. Point is if they deliver, market disruption begins, period.

They have not tapped the market yet and a saturated market demands more replacements or premiumization. Even a 50% CAGR would give only 6.4% penetration if overall 2W demand stays flat.

But clearly disruption is already visible in the ICE scooter segment where e2W has a sweet spot with its low power yet comparable range and a good space to hide the battery.

Ola tries to deliver with online distribution, bt it doesn't necessarily disrupt older channels as 'after sales' and 'look & feel' still remains a key deciding factor ex-metro. Most players are aggressively expanding with dealerships. Makes a strong case for incumbent biggies?

Current production capacity of 12lac/year for an industry selling 1.2cr units/year looks meager. But what if I say the capacity will grow by 22x in just 5-10 years time? Yes, the promises of capacity addn seem to be more than 2x of the entire domestic mkt and 7x of scooter mkt

- thanks to Ola and SimpleE's gigafactory MOUs with TN. Either this is a 'Japan moment' for India in terms of e2W exports or some VCs are going to burn real money soon.

It is clear that the future of the industry lies in the deep pockets of global VCs funding these capex. Ola and Bounce have been backed well but need to observe the rest. Seems most capex promises are 10Y plans and will depend on the offtake in the next 2-3 years.

Hope it was interesting study. RT for wider view and comment to encourage for more such posts 🙏

Source: lot of reading across all financial news platforms; thanks to rushlane for lot of public data

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