Coronavirus: Shake-out in electric two, three-wheeler segment expected in short term

The coronavirus pandemic and the ongoing lockdown will lead to shake-out in electric two and three-wheeler industry with smaller players unable to survive the "extreme short term" folding up, according to Society of Electric Vehicle Manufacturers (SMEV).

However, in the long run there is a silver lining as electric vehicles will find more acceptance with people now realising how air quality and environment has improved during the stay-at-home period with internal combustion engines staying off the roads, SMEV Director General Sohinder Gill told PTI.

"It is a day-to-day operation these days and monitoring being done everyday basis because in the network across India all shutters are down, which means for the last 25 days the retail is zero," he said when asked about the situation on the ground at present.

Apart from the uncertainty of when the lockdown will be lifted, he said it is also unclear if the customers will really come back to showrooms as discretionary spends will always be secondary.

"No one is going to purchase automobiles so soon and within that electric vehicles, which were already having a question mark, people will have second thoughts," Gill said.

He further said with showrooms closed, the biggest issue is that of finance due to lack of sales.

"If the retail earnings stop you cannot order materials. So many of the small and medium players who don't have deeper pockets are already passing through extreme cash crunch situation. You will find that in the process closure of some of the smaller players who are not able to linger on...It is an extreme short term view," Gill said.

Only the players who have some sort of back support, being part of a parent organisation or are flush with funds or has a perspective of persevering through this phase, would be able to sail through, he added.

Gill further said startups which are well funded will also be able to manage but those who were trying to put ideas together and bring a product to the market, seeking investment will pass through a tough time.

"Their progress would be delayed by a year or so. There will be a time lag...There will be a lot of churning, specially in electric two and three-wheelers," he said.

On the positive side, he said many fly by night small operators, who were creating negativity in the market with their sub-standard products and aftersales service, are expected to stop operations thereby leaving behind only serious quality players in the market.

Commenting on the long-term, he said there is a "silver lining" in the coronavirus pandemic as there has been a drastic improvement in air quality and environmental pollution when internal combustion engines have been off the roads during the lockdown.

"Even in the larger perspective of government level or industry level or at consumer level, this is a revelation that how much air can be cleaner or how much atmosphere can be better if there is some sort of control if there is a substitute available," he said.

The only substitute available now is those electric vehicles on the road, Gill said, adding "we believe this will also play in the mind of customers and in the mind of policy makers this will become an important point."