“India’s Electric Two-Wheeler Growth Set to Surge 16-18% Next Fiscal as Rare-Earth Supply Eases, Says Crisil Ratings”

The Indian electric two-wheeler (E2W) market is poised for significant growth, with projections indicating an increase of 16-18% in volumes for the next fiscal year, as the supply of rare-earth materials stabilizes. This marks a notable recovery from the anticipated growth of only 12-13% in the current fiscal year, primarily impacted by supply chain constraints, according to a recent report from Crisil Ratings. The electric two-wheeler sector faced challenges this fiscal due to temporary disruptions in the availability of rare-earth magnets, critical components in many electric vehicle technologies, coupled with adjustments in the goods and services tax (GST) impacting internal combustion engine (ICE) models. Last fiscal, the E2W segment enjoyed a robust growth rate of 22%, reflecting a healthy demand for electric mobility solutions. Crisil Ratings highlighted that the supply disruptions stemming from the shortage of rare-earth magnets significantly impacted E2W volumes around mid-2023. However, as supply began to normalize, coinciding with GST-related price adjustments for ICE models, original equipment manufacturers (OEMs) adopted strategies such as discounting and launching more affordable electric models to bridge the price gap between electric and conventional vehicles. Anuj Sethi, Senior Director at Crisil Ratings, emphasized that these strategic moves have facilitated a recovery in volumes in the E2W sector. The easing of supply constraints for rare-earth materials is expected to further bolster growth in the electric two-wheeler market, as manufacturers ramp up production to meet the rising demand for eco-friendly transportation alternatives. The transition towards electric mobility is gaining momentum in India, driven by government initiatives promoting sustainable transport and the growing consumer preference for electric vehicles due to their lower operating costs and environmental benefits. As the market evolves, stakeholders are optimistic that the electric two-wheeler segment will continue to thrive, supported by favorable policies, increased charging infrastructure, and advancements in battery technology. The future of electric mobility in India looks promising, with significant opportunities for growth and innovation in the electric two-wheeler space as supply chains stabilize and consumer acceptance increases.