Electric bikes vs scooters: Ather CEO explains why scooters are winning the Indian market

In a revealing conversation on The Neon Show podcast, Tarun Mehta, co-founder and CEO of Ather Energy, delves deep into the dynamics of India's burgeoning electric two-wheeler market, explaining why electric scooters are leaving electric bikes in the dust. His insights shed light on the unique preferences of Indian consumers and the factors driving the adoption of EVs.

The Affordability Factor

Mehta highlights a fundamental truth about the Indian two-wheeler market: affordability reigns supreme. He points to the enduring popularity of the Hero Splendor, a motorcycle that has dominated sales for decades.

"Splendor is fundamentally linked to purchase capacity," Mehta states, stressing that its low cost, both upfront and in terms of fuel efficiency, makes it the default choice for a vast majority of buyers.

This price sensitivity extends to the electric segment as well. Electric scooters, with their lower price point compared to electric motorcycles, have a significant advantage in capturing this cost-conscious market.

The Practicality of Scooters

Beyond affordability, Mehta argues that scooters are simply more practical for the average Indian family.

“If you buy a bike in a city if you buy a Splendor, you kind of condemning your entire family to not travel," Mehta observes. He shared the limitations of motorcycles in terms of carrying multiple passengers and luggage, making scooters a more versatile option for families.

Electric Scooters Disrupting the Commuter Segment

Mehta believes that electric scooters are perfectly positioned to disrupt the entry-level commuter motorcycle segment, which is currently dominated by models like the Hero Splendor. He highlights the lower total cost of ownership (TCO) of electric scooters compared to both petrol scooters and motorcycles.

"In my opinion, electric challenges that completely," Mehta states, highlighting the significant cost savings of electric over petrol. "Electric TCO is way better than a uh activ [Activa], way better than a Splendor also."

He predicts that the electric scooter segment will continue to grow rapidly, eventually capturing the lion's share of the commuter market.

The Future of Electric Motorcycles

While Mehta is bullish on electric scooters, he believes that electric motorcycles will eventually find their niche in the Indian market, albeit a smaller one.

"My belief for the last several years has been electric scooters will decimate the commuter entry motorcycle market in India over the next 10 years," Mehta predicts. “What will be left as motorcycles is the premium and the high-performance category 180-200 CC and Beyond, which will be a meaningful chunk, but 10% maybe 20%.”

He suggests that electric motorcycles will need to focus on performance and premium features to differentiate themselves in a market where practicality and affordability are paramount.

A Unique Market Dynamic

Mehta points out the unusual characteristic of the Indian two-wheeler market, where market leaders often command a disproportionately large share, unlike more fragmented global automotive markets.

"India two-wheeler winners never have to settle for scraps," Mehta observes. "If you're a winner you will just like 50-60-70% market share is a given uh which is what creates the really rich margin profile the Indian 2W companies enjoy.”