Estimating electric two-wheeler costs in India to 2030 and beyond

Two-wheelers are simpler and lighter than other vehicle types and consequently their motor power requirements and battery size are much lower. This means they have the potential to be electrified quite cost-effectively, and in India, where there have been more than 20 million two-wheelers produced each year since 2017, there is serious policy interest in electrification. In this paper, the authors consider the consumer costs of electric versus conventional combustion engine two-wheelers. The analysis was conducted by first apportioning the 2020 upfront costs of top-selling conventional two-wheelers and electric two-wheelers into component-level direct manufacturing costs and indirect costs, including manufacturer and dealer margins. All costs were then projected into the future to estimate full-vehicle upfront costs to the consumer beyond 2020. The authors further assessed the 5- and 10-year total cost of ownership (TCO) for both electric and conventional models in 2020 and beyond. All cost estimates are projected for short-, mid-, and long-range electric models, and under for two different electrification scenarios, one that assumes 100% of new two-wheeler sales will be electric by 2035 and the other that assumes 100% electric for new sales by 2047.

Results show that the battery cost reduction schedule and the availability of key government incentives are the main factors influencing the upfront price of electric two-wheelers. Further, faster electric two-wheeler market penetration leads to quicker cost reductions and lower government subsidies. Even small variations in the timing of battery cost reductions, when coupled with price-dependent factors, could mean the difference between continued government outlays for incentives for electric two-wheeler cost parity and lower government expenditures. As shown in the figure below, the larger the battery pack (i.e., the longer the range), the later parity is reached in upfront cost, 5-year TCO, and 10-year TCO with central government incentives.

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