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

The Indian electric two-wheeler (E2W) market is poised for significant growth, with projections indicating an increase of 16-18% in volume for the next fiscal year, as supply constraints around rare-earth materials begin to ease. According to a recent report from Crisil Ratings, this growth follows a deceleration to 12-13% in the current fiscal year, primarily attributed to disruptions in the supply chain for rare-earth magnets and the impact of goods and services tax (GST) rationalization affecting internal combustion engine (ICE) models. In the previous fiscal year, the E2W segment experienced a robust volume growth of 22%. Crisil Ratings notes that the mid-year supply disruption caused by a shortage of rare-earth magnets significantly hindered E2W volumes. However, as the availability of these critical materials has improved, coupled with GST-related price adjustments for ICE models, original equipment manufacturers (OEMs) have strategically responded by offering discounts and launching more affordable electric vehicle models to bridge the price gap between ICE and electric options. Anuj Sethi, Senior Director at Crisil Ratings, emphasized that these strategies have contributed to a recovery in volumes. The easing of rare-earth material supply is crucial for the E2W market’s growth trajectory, as these components are integral to the production of electric motors and batteries. As manufacturers adapt to market demands and supply conditions, the future of electric two-wheelers in India appears promising, aligning with the country’s broader goals of promoting sustainable transportation and reducing carbon emissions. With the government’s push for electric mobility and favorable policies, the electric two-wheeler sector is likely to attract more investments, further boosting production capabilities and consumer adoption. The anticipated growth in the E2W market not only plays a vital role in India’s transition to electric mobility but also opens avenues for job creation and technological advancements within the automotive industry. As the market evolves, stakeholders must stay vigilant about supply chain dynamics, pricing strategies, and consumer preferences to capitalize on the promising outlook for electric two-wheelers in India.