Can Ola's e-bike break ICE's dominance over India's motorcycle market?

Last Thursday — it was Independence Day — Ola’s founder Bhavish Aggarwal addressed his 6,000-odd stakeholders at Ola Electric’s Gigafactory in Tamil Nadu. During the presentation, he threw one more challenge to the decades-old hierarchy in India’s two-wheeler industry by announcing a range of electric motorcycles under the Roadster brand.

Ola’s bikes straddle all the three important market segments: commuter, mid-market, and super premium. These segments are now fiefs of Bajaj Auto, Hero MotoCorp, and TVS.  

As the opening salvo, Ola has chosen aggressive pricing. At Rs 74,999, Roadster X, powered by a 2.5 KWH battery, is close to the price of a 110cc petrol equivalent variant from the legacy players, nearly bridging the price differential between ICE (internal combustion engine) and electric. At the super-premium end of the market spectrum is the Roadster Pro, priced at Rs 2.49 lakh and running on a 16 GWH battery that promises a range of 579 km — higher than many cars. It has also offered customers a choice within the segment by giving them options of more powerful batteries, which offer longer ranges but, of course, at a higher price.

“With two- thirds of India's two-wheeler market consisting of motorcycles, Ola’s entry in this segment will only accelerate the penetration of electric two-wheelers,” says Aggarwal.     

However, though bookings for Ola’s e-bikes are open, the delivery is some time away. The commuter and mid-market bikes will start to reach buyers after five to seven months. The super-premium bike will come later, in the fourth quarter of 2026.  

So how do competitors view Ola’s assault?

Pricing game

“The price for the entry level Roadster X is unsustainable. A 3KWH electric scooter has an industry average bill of materials cost at around Rs 1 lakh. For a mobike it might be slightly lower. But there is no way you can sell the bike and make money at Rs 75,000, unless it is just an introductory price,” says a top executive of a leading two-wheeler maker. At best it is a ploy to get into showrooms customers who have earlier bought scooters or bikes below Rs 70,000 and then upsell. “It’s a smart strategy,” says the executive.

He points out that the long wait for delivery is a deliberate move by Ola. Based on feedback from bookings, it can understand which models have customer demand and which do not. So, it can easily rework its model strategy. Some models might not come to the production stage.  

“I think the sweet spot for Ola will be the mid-segment, ranging from Rs 1.04 lakh to Rs 1.39 lakh, which is the 125cc to 150cc equivalent for ICE motorcycles. They should also break even on the Rs 99,000 commuter bike,” the executive added.

Ola is offering its mobikes at a price more attractive than its scooters by taking advantage of the lower bill of materials cost for mobikes, which have fewer panels than scooters. Ola S1X e-scooter with a 2 KWH battery is priced at Rs 74,999, which is the same as the Roadster X mobike, but the latter has a bigger 2.5 KWH battery.

 

 

Will that lead Ola’s e-bikes to cannibalise its e-scooters?

“It is designed to capture a broader segment of the market, particularly those who might find the price of the electric mobike prohibitive. By offering an affordable mobike, Ola is aiming to increase adoption among urban commuters and younger riders,” says Harshvardhan Sharma, head of auto retail practice at Nomura.

The electric mobike market has been languishing. The largest player in it, Revolt Motors, sold only over  7,000 electric mobikes in 2023-24. Pune-based Tork Motors, in which Aggarwal and Bharat Forge had put in money, has stopped selling according to reports .

“Surely there is a big electric mobike market. Ola will have the first mover advantage. But we prefer to be the second, as we do not have deep pockets. And though we are already working on our bikes, what we are not clear is in which segment will the market for electric mobikes be viable and profitable. That we will learn from Ola,” says the CEO of an electric scooter maker.

 

Many dimensions

Ola’s mobike strategy has been to ramp up volumes and reduce costs, supported by technological innovation. 

In a conversation with Business Standard in July 2023, Aggarwal had said the price-value equation of electric mobikes was not right, and the products were not good. Ola, with its strong supply chain built on e-scooter volumes, would bring quality at the right price, he had said.

He had argued that the penetration curve of mobikes would be faster than e-scooters, as people were already getting educated on electric. Ola would not have to start from scratch, as it had already invested in the plant and machinery, supply chain, and localisation. It merely had to make incremental investments.

Aggarwal had been banking on making its own battery cells, a key cost for electric vehicles, which would eventually reduce costs by 30 to 40 per cent and increase the driving range by 20 per cent, compared to imported cells. But Ola’s own batteries are expected to be on its bikes only by the first quarter of 2025-26. 

Aggarwal can now start to leverage the government’s production linked incentive scheme for automobiles as well as for battery cells — he is eligible for both — to reduce the overall cost of production and improve margins, even if government subsidies on electric two-wheelers end.

Ola has developed a new platform, the Gen 3, which will reduce costs as well as boost output by integrating the motor, battery, and electronics into one box.

Alternative play 

The current leaders of the motorcycle market are not perturbed, at least for now. Bajaj and TVS have got into e-scooters in a big way and upped the ante by entering the sub-Rs 1 lakh segment. They are gaining market share.

For motorcycles, both have decided to take the hybrid route. Bajaj has already launched Freedom 125, the world's first commercially produced CNG motorcycle, which comes with a cylinder as well as a petrol tank, and the driver  can switch from one to another.

Rakesh Sharma, Executive Director of Bajaj Auto, says the CNG bike is targeted at the customers mindful of the operating expenditure, such as those in the 100-125cc segment, which accounts for 75 per cent of mobike sales. At a price of Rs 95,000 to Rs 110,000, the CNG mobike halves the cost of fuel compared to a similar ICE motorcycle. Unlike an electric two-wheeler, the CNG bike has no range anxiety.

The Freedom 125 has already received traction: Bajaj says it is touching sales of 2,000 in just over a month of launch despite limited production, which is to be scaled up to 6,000 a month.     

But CNG may be an interim measure. “Established players might be focused on CNG bikes as a more immediate and cost-effective alternative, but if Ola’s mobike plans prove successful, it will push them to accelerate their own electric mobility plans to stay competitive,” says Nomura’s Sharma. Legacy players also need to keep in mind that ICE bikes can cannibalise their petrol siblings, which are their mainstay.

Ola, however, will face a tough fight at the super premium market, where Eicher and Hero MotoCorp are readying their electric play. Royal Enfield’s e-motorcycle is on track for a launch in 2025 and the company plans to set up a factory that can roll out 150,000 e-bikes a year.

Hero has tied up with California-based Zero, which manufactures premium e-bikes, though no timelines have been announced for launch.

Then there is Honda. In a global announcement last November, Honda said it would come out with e-motorcycles in 2024. 

There has been silence after that, but the company plans to first launch in India a 110cc-125cc commuter segment motorcycle with swappable batteries.

But Ola, buoyed by a successful initial public offer, is not to be underestimated.