| |OCTOBER 202219OLA'S ENTRY TRIGGERS PRICE WAR IN ELECTRIC TWO-WHEELER SECTORhas the potential to turn into a global EV manufacturing hub and Ola's EV ambitions hinge on its make-or-break pricing. Affordability could assist achieve scale in a vehicle segment where scooters with traditional engines cost around Rs.75,000 to Rs.80,000. At the time of proclaiming his e-scooter's pricing in August, Ola chief executive Bhavish Aggarwal had said that low running costs and inexpensive maintenance could assist it take on traditional two-wheeler makers. "Ola's scooter pricing comes from a known disruptor. Competition will have to counter it on pricing, technology and efficiency as their USPs for e-scooters", stated VG Ramakrishnan, MD of Avanteum Advisors. "Ola has managed to establish its brand and sourcing efficiently to cater to large volumes". EV companies will compete on technology and performance in addition to price, said Jeetender Sharma, managing director of Okinawa. "The benchmark is the Honda Activa and it should be easy to transform it into an e-scooter. Consumers are preferring e-vehicles due to lower operating costs", Sharma stated. Tarun Mehta, CEO of Ather Energy, said automotive purchasers do not decide purchases `by a small price delta'. The market is poised to grow and will gain traction in the subsequently couple of years. "Unlike the conventional engine two-wheeler market, the EV industry is only one percent of the segment and artificially reducing prices will not help growth, but only lead to further cash burn, which isn't in the interest of any player," stated Naveen Munjal, MD of Hero Electric, one of the early entrants in this space which retails its e-scooters in the Rs.60,000- Rs.70,000 price bracket. Numerous e-scooter models saw a substantial price reduction thanks to various state subsidies which have been passed on to customers, making the products affordable, manufacturers said. "Our prices have come down due to state subsidies", Mehta stated. The price war comes in the backdrop of the government's decision to boost subsidies on electric two-wheelers by 50 percent to Rs.15,000 per kWh under the government's FAME II scheme, which came into effect in 2019 to help hasten the transition to electric vehicles. While demand is rising for electric two-wheelers, the supply of parts from China has been hit, which is hampering volumes. "We are import dependent, and localization is currently at 50 percent with supply constraints", said Anjali Rattan, founder, Rattan India Enterprises, which recently invested Rs.150 crore in electric motorcycle maker Revolt Intellicorp. "Large scale electric two-wheeler adoption is still plagued by cost and infrastructure issues", she stated. Munjal of Hero Electric said the firm is reskilling "roadside mechanics, putting portable batteries in two-wheelers, thereby aiding consumers". Firms in the EV space need scale, a robust supply chain and dealer network, he added. Experts said government subsidies will increase adoption, encourage research and development and innovation to bring it closer to the target of 30 percent share of the two-wheeler market in five years, up from just one percent at present. India's electric vehicle market could touch $206 billion in a decade, with over 100 million units sold, as per Delhi-based think tank CEEW Centre for Energy Finance. The Indian electric two-wheeler sector is presently dominated by a handful of players and the entry of Ola has charged up the e-scooter landscape further, they said. India has the potential to turn into a global EV manufacturing hub and Ola's EV ambitions hinge on its make-or-break pricing
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