With annual growth rates of over 60%, India and Indonesia are expected to be two of the world's top three markets for selling electric two-wheelers (E2W) by 2030, a Mckinsey survey noted
McKinsey's report, 'Capturing growth in Asia's emerging EV ecosystem' stated that while consumers in Asian countries adopt EVs at varying rates—the adoption rate is high in mature markets such as China and Japan, but less than 1% of new vehicle sales in India and the ASEAN in 2021—there are four signs of growth.
China's continuous progress to become the largest EV market in absolute terms; customers in India and ASEAN picking up electric two-wheelers; Asian regulators' tightening EV laws; and the ascent of Asian companies, are examples of the trend.
Asia's emerging markets are currently the largest micromobility markets. In 2017, India surpassed China to become the largest market for E2Ws. "As electric models become more cost-competitive and as authorities incentivize customer uptake, E2Ws will become the major method of transportation in the region," the paper states and adds, "Our modelling indicates that by 2030, India and Indonesia would be the second-and third-largest E2W markets in the world, respectively, after China, with annual growth rates of more than 60 percent."
According to the report, this trend will result in a 36 percent electrification rate for two-wheelers in India and ASEAN by 2030, up from less than 1% now.
Asian EV brands are also on the increase, and while China has the most notable electric four-wheeler brands (such as BYD and Hongguang), India has up to 80 EV start-ups, the majority of which are in the E2W area, according to data from OTO Capital, a two-wheeler financing start-up.
The report lists three major obstacles to the growth of Asia's emerging EV market: parity in the total cost of ownership (TCO), which is closely tied to the regulatory environment; availability of OEM models and readiness of the supply chain; and critical mass in charging infrastructure.
TCO parity is being driven by strong policy frameworks that enable OEMs ranging from incumbents to start-ups to deliver a diverse range of appealing models, including low-cost EV models with close feature parity to ICE equivalents at comparable price points; and large-scale government and corporate investment ahead of the curve in EV charging infrastructure to support the targeted volume of EVs on the road. Again, research suggests that supply and demand must be stimulated simultaneously, the paper added. "These problems are especially clear in India and ASEAN, where TCO parity and a ready supply chain are important for getting more people to use the technology," the report mentioned.