Fire Incidents, Supply Chain Crisis Drag Down Two-Wheeler EV Sales In May

The two-wheeler electric vehicle (EV) segment has witnessed a sharp decline in its May 2022 sales in India following the recent escooter fire incidents and the global supply chain crisis for EV batteries. The declining trend is clear over the last three months.

In May, the total electric two-wheeler sales dropped to 39,477, which is about a 20% drop from a month earlier and a 20.5% decline from March 2022, as per Vahan data.

Bhavish Aggarwal-led Ola Electric, one of the major names in the EV two-wheeler segment, has seen a 27.3% month-on-month (MoM) decline in its total vehicles sold in May. While the startup’s total EV sales rose 39% MoM to 12,702 units in April this year, its May sales volume stood at 9,230 units.

On the other hand, Hero Electric’s two-wheeler EV sales dropped by 50% or more over the last three months. Its total sales volume stood at 2,850 units in May compared to 6,579 in April and 13,028 in March, according to Vahan data. 

The trend of EV two-wheeler sales decline in May is also common across companies such as Pure EV, Okinawa Autotech, Ampere Vehicles and Jitendra EV.

 

The Federation Of Automobile Dealers Associations (FADA) has partially cited the reason for the decline to multiple EV fire incidents that have mounted since March this year.  

“While 2W EV sales were growing rapidly though on a low base, various fire incidents across almost all EV brands has created a fear in the mind of the customer,” FADA said in its May ’22 Vehicle Retail Data report.

“This coupled with supply chain issues has decreased 2W EV sales drastically from last month,” it added.

Fire Incidents Led The Sales Decline?

In fact, there could be a clear connection between the EV two-wheeler sales drop and the escooter fire incidents. A majority of the companies that have witnessed the slump are associated with the safety incidents that took place in the last few months, which have also pushed the government to rethink its stand on policies around EVs in India.

The highest number of safety incidents were reported against Ola Electric, Pure EV, Okinawa Autotech, and Jitendra EV, taking the total number of escooter fire cases to about 30. Recently, the names of Ampere Vehicles, Hero Electric and Ather Energy also joined the list. However, Ampere did not clarify the report, while Hero Electric said the fire was due to a short circuit at the socket where the escooter was being charged overnight. 

In Ather’s case, the startup said that the fire that took place at one of its experience centres was due to water entering the cracks of the battery pack of a damaged vehicle.  

Interestingly, Ather’s sales volume has increased about 36% MoM to 3,328 vehicles sold in May. The startup, which has repeatedly assured safety in its escooters, has not seen any slump in its sales volume since the beginning of this year. 

While its February to March sales volume remained flat at 2,233 units sold, it rose about 10% MoM to 2,451 in April.

However, Okinawa sold the highest number of escooters (9,303) in May followed by Ola Electric.

Soaring Raw Material Price Added To The Sales Slump

The overall slump in the Indian EV two-wheeler segment can also be seen in the backdrop of the major supply chain issue that has hit the electric vehicle industry worldwide. In a recent report, the International Energy Agency (IEA) said that lithium prices, one of the most crucial minerals needed for manufacturing EV battery cells, were over seven times higher in May 2022 than at the start of 2021, while the prices of other crucial elements such as cobalt and nickel also rose.

“In the short term, the greatest obstacles to continued strong EV sales are soaring prices for some critical minerals essential for battery manufacturing, as well as supply chain disruptions caused by Russia’s attack on Ukraine and by continued Covid-19 lockdowns in some parts of China,” it added.

For India, it could be more significant because the country doesn’t manufacture lithium-ion cells required for making the EV batteries, while a large number of EV companies import a majority of the parts from other countries to make their vehicles.

The total number of EVs sold in India in May across vehicle segments has also witnessed an over 9% decline to 65,818 units sold the month.

The total EV sales had grown by 3X in FY22, selling 4.3 Lakh units of vehicles.

On the other hand, the Indian government has maintained its bullish stance on India’s EV segment. Union Transport Minister Nitin Gadkari also said last month that the number of EVs in the country will go up to 30 Mn in the next two years.