Small Indian towns overtaking big cities on EV ride, shows report

Top three e2W consuming states saw towns with sub-million population accounting for majority of sales--56% in Maharashtra, 75% in Karnataka and 78% in Tamil Nadu

Of all the news about electric two-wheelers catching fire over the last month, only one has come from Chennai. All the other incidents occurred in smaller towns. It is places such as Warangal, Coimbatore, Trichy and Nizamabad that have seen multiple incidents of electric two-wheelers going up in flames and stoking concerns about the safety of their lithium-ion batteries.

Data from the Council on Energy, Environment and Water tells us why. In the country’s biggest electric two-wheeler buying states, towns with less than a million people accounted for the majority of the sales: 56 per cent in Maharashtra, 75 per cent in Karnataka, and 78 per cent in Tamil Nadu.

It helps that the charging infrastructure needed for electric two-wheelers is much simpler than what electric cars need. “As electric two-wheelers don't really require sophisticated charging infrastructure, small towns may be equally well-placed to participate in the transition,” said Gagan Sidhu, director, CEEW Centre for Energy Finance.

This means small towns are buying electric two-wheelers with the same fervour that they have for two-wheelers running on internal combustion engines and burning petrol. So far, EVs were considered as urban or big city vehicles due to the lack of charging facilities in small towns and various other reasons.

For all two wheelers, 69 per cent of the purchases in Maharashtra are in small towns. The figures are 79 per cent for Karnataka, and 82 per cent for Tamil Nadu.

Manufacturers of electric two-wheelers agree. Ather Energy, for instance, kick-started its journey in Tier 1 markets, but soon expanded into Tier 2 and 3 towns. “The demand in small towns was phenomenal,” said Ravneet S Phokela, Ather’s chief business officer. “This yet again challenges the stereotype that Tier 2 and 3 markets are predominantly price-driven. Consumers see electric vehicles as an upgrade and as the technology of the future. The attractive total cost of ownership drives the willingness to pay a premium.” 

The sustained rise in petrol prices has sharply increased the overall cost of ownership for traditional two-wheelers, squeezing household budgets in small towns where average incomes are lower than in the metros. “Buyers over there are lapping up electric two-wheelers,” said Nikunj Sanghi, who owns J S Four Wheel, a dealer for Hero MotoCorp and Mahindra and Mahindra, in Alwar, Rajasthan.

Coimbatore-based Boom Motors, which was part of a fire incident, told Business Standard recently that more than 60 per cent of its orders were coming from Tier 2 and 3 towns, such as Coimbatore, Kanchipuram, Chittoor, Ernakulam, Mysuru, and Visakhapatnam.

A report by JMK Research says overall EV sales in March 2022 bounced back to their growth trajectory, clocking 77,128 units – a 196 per cent increase over March 2021. This was driven by a three-fold rise in the demand for electric two-wheelers.

At the national level, EVs crossed 1 per cent of total vehicle sales in January 2021, 2 per cent in August 2021, and 3 per cent in December 2021. For March 2022, they were more than 4 per cent.