Friday, October 4, 2024

OLA Electric’s dominance in 2W electric segment faces stiff competition as major players enter EV fray

Must read


The push for electric two-wheelers (2W) in India has been accelerating at an impressive rate, driven by a growing shift in consumer preferences from traditional internal combustion engine (ICE) vehicles to greener, more sustainable mobility options.

This transition is driven by increasing environmental awareness, discounts on popular models, government incentives, and lower maintenance costs than fuel-powered vehicles. Globally, India is one of the top two-wheeler manufacturers, producing 2.1 crore two-wheelers in FY24, with electric two-wheeler sales reaching 9.42 lakh units.

Although this figure seems modest, it has steadily grown, particularly in urban markets. OLA Electric, which recently debuted on the Indian stock exchanges, dominates the 2W electric market.

However, with electric vehicle (EV) adoption anticipated to rise significantly in FY25, major players such as Bajaj Auto, Hero MotoCorp, and TVS Motors are gearing up to introduce new, competitively-priced models. Analysts predict that these new entries could seriously challenge OLA’s current market dominance.

Also Read | OLA Electric stock slumps for 6th straight session, down 30% from recent highs

In August, OLA’s market share fell to 31 per cent from 39 per cent in July. Despite this drop, OLA remains ahead of its competitors, with cumulative sales of 297,695 units over eight months, marking an 81 per cent increase. This performance has boosted OLA’s overall market share to 41 per cent, up from 30 per cent a year ago.

Analysts believe competitors’ upcoming launches could impact OLA’s market position, intensifying competition in the rapidly growing EV sector.

For instance, Hero MotoCorp, the world’s top two-wheeler producer, is seeing a growing demand for its Vida electric scooters. The company is expanding its presence with 203 touchpoints, including 180 dealerships in 116 cities.

Intending to double its electric vehicle sales, Hero is increasing the reach of its Vida brand and plans to release a more affordable model.

Also Read | Mumbai man slams cab driver to ground for bumping into his Audi | Video

Bajaj Auto, meanwhile, is aiming to boost its two-wheeler stores from 250 in the first quarter of FY25 to 500 by the second quarter. The company has grown its market share through competitive pricing, dealer network expansion, and the launch of affordable models. Its flagship electric scooter, the Chetak Urbane, has successfully challenged its competitors.

TVS Motor is also progressing rapidly in the electric vehicle market. The company expects two-wheeler EV sales in India to hit 30 per cent market penetration by 2025 and is working toward significantly increasing EV sales over the next two years.

Currently, TVS offers its iQube electric scooter through 750 dealerships across more than 450 cities. It has plans to roll out new electric two-wheelers (E2Ws), electric three-wheelers (E3Ws), and internal combustion engine two-wheelers (ICE 2Ws) in the second and third quarters of FY25.

Also Read | InCred Equities recommends buying Hero MotoCorp shares on dip, upgrades to ’Add’

Ather Energy, backed by Hero MotoCorp, recently reached 10,000 retail sales between July and August. In June, Ather announced the construction of its third manufacturing facility in Aurangabad Industrial City (AURIC), Maharashtra.

This new plant, requiring an investment of over 2,000 crore, will be able to produce up to one million units of electric vehicles and battery packs annually.

OLA’s market leadership declines in 5 top states

According to domestic brokerage firm Elara Capital, OLA Electric has lost its market leadership position in five of the top ten states, accounting for 80 per cent of the EV market. Notably, four of these losses occurred incrementally in August.

In three of these states, OLA Electric is now the third-largest player. However, in Haryana, the company achieved an 81 per cent market share in August, marking a 2,800-basis point increase year over year and a 1,490-basis point rise month-over-month. The brokerage emphasized that sustaining this level of market share will require close monitoring.

Elara Capital projects growth for established EV players

According to domestic brokerage firm Elara Capital, Hero, Bajaj, TVS, and Ather Energy were initially seen as the “tortoises” of the industry, as their growth was slow compared to the rapid strides made by Ola Electric in a short time.

However, the brokerage expects these incumbents and Ather to increase their market share by launching more affordable scooters and expanding their distribution networks while maintaining a strong focus on quality.

It notes that Hero, Bajaj, TVS, and Ather’s combined market share reached an all-time high of 56.3 per cent in August, and it anticipates this share will grow further, especially with TVS Motor’s increased distribution efforts and the introduction of lower-priced models.

Also Read | Electric vehicles don’t need subsidies now, says transport minister Gadkari

Additionally, the report highlights that Honda Motorcycle and Scooters India (HMSI), the market leader in internal combustion engine (ICE) vehicles, has yet to launch an electric scooter, which could further erode OLA Electric’s market share.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.

Catch all the Business News , Market News , Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.

MoreLess



Source link

More articles

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Latest article