Fuel consumption standards for the new two-wheeler fleet in India

The shift to fuel injection in two-wheelers that has come with India’s implementation of Bharat Stage VI emission standards brings with it the opportunity to adopt several modern internal combustion engine (ICE) technologies from the passenger car, limited only by cost-bracket considerations and vehicle size. These incremental technologies can unlock opportunities for significant efficiency benefits, and as this briefing demonstrates, setting corporate average fuel consumption standards for the new two-wheeler fleet would be an effective way to both spur the adoption of modern ICE technologies and accelerate electrification.

Our prior analysis showed that achieving fleet average fuel efficiency improvement for two-wheelers beyond 23% from the current level is more expensive if using ICE technologies alone. Beyond this threshold, it is cost-effective to increase the market share of electric two-wheelers. The cost-effective combination of electric and ICE two-wheeler market share to achieve two plausible levels of fleet average gCO2/km are shown in the figure below. For a fleet average fuel consumption level of 25.3 gCO2/km in 2025, as shown on the left, our research shows it is cost-effective to have a market share of 19% for electric motorcycles and 13% for electric scooters.

Similarly, if the two-wheeler fuel consumption standard were to be set at a level equal to or below 20.5 gCO2/km for 2030, as shown on the right, that would likely ensure that at least 60% of new two-wheeler sales are electric that year. This fleet average CO2 level would correspond to a nearly 50% reduction from the current fleet average CO2 level, and that might seem ambitious, but our supporting study shows that this target is feasible. Additionally, at 60% electric for new sales in the two-wheeler segment by 2030, our projections show CO2 emissions would be about 32 megatonnes annually, far lower than they would have reached in the business as usual scenario, and cumulatively, the energy consumption reduction could be nearly 49 million tonnes of oil equivalent by 2030. Based on the current gasoline retail price of INR 100 per liter, this equates to fuel savings of nearly US$75 billion by 2030.