In Asia, two-wheelers have always been a common form of transportation, and as electrification has increased, so too has the use of electric two-wheelers, or E2Ws. Although China now dominates the E2W business, another Asian economy is expected to surpass it in the upcoming years. According to the “Micro EVs 2025-2045: Electric Two-Wheelers, Three-Wheelers, and Microcars” analysis by IDTechEx, India will emerge as the next major E2W production and sales hub, helping to fuel a rapidly expanding micro EV market that is expected to reach a global valuation of US$90 billion by 2045.
Today, China dominates the sector
China currently leads the world in E2W sales without a doubt. China accounted for more than 85% of all sales in 2023, and E2Ws are now widely accepted there. As early as the 1990s, it started implementing the technology, and it has continued to have an advantage ever since. Many of the biggest E2W manufacturers in the world, like Yadea and Niu, are based in China. They produce low-power electric mopeds that are reasonably priced for the average person and ideal for the nation’s congested cities.
The IDTechEx analysis does, however, point out a number of patterns that point to a less bright future for the Chinese E2W market.
The Chinese market is not moving
A sizable population and growing income levels have long supported the nation’s home market, which grew quickly in the latter half of the 20th century. However, China’s population is ageing and falling, and its demographics are rapidly shifting. At the same time, there has been a notable increase in consumer spending power and individual wealth. Due to these two considerations, more individuals are choosing larger modes of transportation over two-wheelers.
In actuality, this affects more than just two-wheelers; as larger sedans and SUVs take their place, other micro-EV models, such as three-wheelers and microcars, are also feeling the pinch. As cars gain popularity and the addressable customer base for two-wheelers continues to decline, the “Micro EVs 2025-2045: Electric Two-Wheelers, Three-Wheelers, and Microcars” report projects that the Chinese market will first stagnate before eventually declining.
India is improving
The Indian E2W market is much younger, less crowded, and has more potential for future expansion than the Chinese market, where EVs account for more than half of moped sales. According to IDTechEx’s research, a combination of market, technological, and regulatory variables creates the perfect conditions for broad adoption.
One of the world’s most polluting nations, India frequently has dangerously high air pollution levels in several of its cities. In a market where two-wheelers sell significantly more than passenger cars, consumers are now turning to E2Ws in their fight against air pollution, as vehicles are responsible for over 70% of emissions.
Another factor at play here is the high cost of fuel. In the years after the pandemic, gasoline prices in India have fluctuated significantly, while electricity rates have stayed relatively steady, providing consumers with a more affordable and dependable total cost of ownership.
Additionally, the growth of e-commerce will increase demand for E2Ws. India has a robust e-commerce industry thanks to its rapidly expanding population, rising incomes, and modernisation. In order to meet their sustainability objectives and environmental commitments, many businesses in this sector electrify their fleets of two-wheelers.
Governments and OEMs reacting
The increase in E2W demand is being noted by local Indian OEMs as well as the federal and state governments, who are reacting appropriately.
India is home to numerous well-established and historic manufacturers of two-wheelers with combustion engines, which have long enjoyed widespread popularity in the nation. The market titans Mahindra, Bajaj, and TVS are among the many businesses that have embraced electrification and have either developed or intend to produce E2Ws. With relatively new OEMs like OLA Electric, Ather, and Ampere securing substantial financing and dominating the market, the nation is also home to a growing E2W startup sector.
In the meantime, the Indian government has taken a far more active role than others in establishing favourable policy conditions for the expansion of E2Ws. The FAME II subsidy programme, which was succeeded by the EMPS programme, is one of its largest commitments in the form of subsidy schemes. According to the “Micro EVs 2025-2045: Electric Two-Wheelers, Three-Wheelers, and Microcars” IDTechEx research, these programmes were among the most generous of any plan globally, essentially making E2Ws less expensive than combustion and significantly boosting domestic E2W sales, which have quadrupled.
While 28 state and local governments offer their own subsidies for E2W purchases or charger installations, the government also has distinct programmes targeted at expanding charging infrastructure nationwide. The larger E2W client base has profited from the alliances that OEMs and charging companies have formed as a result of these regulations.
Lastly, there are a few areas where the government and OEMs have collaborated to change the E2W environment in India. Domestic OEMs must import Li-ion cells because the nation is not a major supplier of batteries. This is a significant market bottleneck, as imports are more expensive and present logistical challenges, which drives up E2W pricing. As a result, many businesses are aiming to expand their own Li-ion production capabilities. Mahindra is thinking about building gigafactories in India to produce their E2Ws, whereas OLA Electric is already doing so. The Indian government is providing more financial support to encourage this shift. Long-term expansion of E2Ws will be accelerated by the more than US$2 billion in incentives it has made available for domestic Li-ion cell production.
The detailed report “Micro EVs 2025-2045: Electric Two-Wheelers, Three-Wheelers, and Microcars” outlines the factors that will contribute to India’s future E2W achievements. Additionally, it offers crucial market developments, key player and product benchmarking, and the most recent sales trends for India and all other major micro-EV markets. The global market is expected to reach US$90 billion by 2045, according to detailed 20-year projections that are broken down by region, vehicle type, power, and battery chemistry.