Abstract

Concerned with the fluctuating crude oil prices and high dependency on depleting oil reserves, many countries have been trying to find an alternate fuel that would increase the efficiency of passenger vehicles and control the hazards of environmental pollution. The advancements in battery technology led to the development of battery-powered cycles, scooters, motorcycles, and cars. Electric two wheelers (E2W) running on battery were fuel-efficient and emitted no pollutants that were harmful to the environment. Between 2006 and 2008, many E2W manufacturers the world over recorded high sales as this period witnessed the highest ever rise in crude oil prices. Among these countries, China recorded the maximum sales of E2Ws with domestic sales projected to reach 30.1 million units by 2010.1 In India, the market for E2Ws was at a nascent stage and was estimated at around Rs. 4 billion in the period April 2008 – March 2009, and expected to grow to Rs. 5 billion in the subsequent year. Along with a few reputed manufacturers of two wheelers, many other small players were competing in the market as it emerged as a high potential, new segment among two wheelers. In addition to the domestic market potential, E2Ws also offered export opportunities. But there were a few disadvantages that E2Ws suffered from compared to conventional vehicles. Low speed, the limited distance that could be covered on a single battery charge, the lack of infrastructure for charging the batteries, and high costs hindered the growth of E2W sales. A concerted policy by the Indian government was also required to reduce costs, encourage sales, and boost market growth. Nevertheless, the innovations in battery technology, particularly the use of lithium ion batteries, provided an opportunity for growth. Lithium ion batteries offered longer life and a higher range for a single charge compared to lead acid batteries. Their use also eliminated the environmental hazards caused by the use of lead acid batteries.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

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Keywords

Electric Two Wheelers, E2Ws, Environmental pollution, Fossil fuels, Alternate fuels, Rechargeable batteries, Lithium ion battery technology, Lead acid battery, Charging stations, Motorcycles, Scooters, Mopeds, Subsidies, Indian Government Policy, Fuel efficiency, Tax exemptions, Battery replacement, Hero Electric, Electrotherm India, Ultra Motors, Tube Investments India Ltd., YO bikes, Society of Indian Automobile Manufacturers, SIAM, Ministry of New and Renewable Energy, MNRE, Indian Central Motor Vehicles Act and Rules, Hirsch report, Society of Electric Vehicles Manufacturers, Automotive Research Association of India, China