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In India, the future of two-wheelers, such as motorcycles and scooters, is bright and electric. Owing to their accessibility and affordability, these vehicles have long been an integral part of India’s mobility ecosystem, accounting for more than 70 percent of all vehicles. And consumers are ready to take them electric: by 2030, electric two-wheelers are expected to account for 60 to 70 percent of new sales in India. Consumers are not only prepared to purchase more electric two-wheelers but are also evolving their buying journeys by embracing more omnichannel experiences.
About the authors
This article is a collaborative effort by Tushar Goswamy, Alexander Grausam, Bhavesh Mittal, Timo Möller , Felix Rupalla, and Prabhmaan Thapar, representing views from McKinsey’s Automotive & Assembly Practice and the McKinsey Center for Future Mobility.
The increased use of electric two-wheelers will support India’s alignment with global climate policies, central- and state-government initiatives (such as FAME [Faster Adoption and Manufacturing of Electric Vehicles]), and city access regulations aimed at reducing air pollution and improving traffic conditions. However, concerns about vehicle safety, battery life, and lack of charging infrastructure could present challenges in achieving full market penetration sooner.
Methodology
This article is informed by insights from McKinsey’s online India Mobility Consumer Survey conducted in December 2022. We surveyed about 1,200 participants across income ranges, household compositions, and regions in India with varying mobility patterns. This India-specific perspective complements the regular McKinsey Mobility Consumer Pulse Survey, a global survey with more than 50,000 consumer data points to discern future mobility-consumer trends, shifting preferences, and the evolution of consumer segments over time.
We sought out to understand consumer behavior and preferences amid this rapid shift toward two-wheeler electrification. A survey of roughly 1,200 Indian electric-vehicle (EV) consumers underscored the importance of product preferences, channel preferences, ownership models, and affinity for premium features (see sidebar, “Methodology”).
The granular survey data also allowed us to segment the mobility consumer landscape into seven archetypical consumer groups based on their mobility usage and psychography. Two-wheeler mobility is particularly relevant for “cost-constrained mobilists,” consumers who need to get from point A to point B as cheaply as possible; “mobility innovation pioneers,” consumers who are willing to be the first to try out new disruptive mobility services; and “micromobility enthusiasts,” consumers who use two-wheelers to get around in and out of town. We saw the aforementioned trends unfold differently across these groups.
About the McKinsey Center for Future Mobility
These insights were developed by the McKinsey Center for Future Mobility (MCFM). Since 2011, the MCFM has worked with stakeholders across the mobility ecosystem by providing independent and integrated evidence about possible future-mobility scenarios. With our unique, bottom-up modeling approach, our insights enable an end-to-end analytics journey through the future of mobility—from consumer needs to modal mix across urban and rural areas, sales, value pools, and life cycle sustainability. Contact us if you are interested in getting full access to our market insights via the McKinsey Mobility Insights Portal.
OEMs can expect the two-wheeler segment, which has dominated the Indian automotive sector for years, to intensify further: 31 percent of respondents expect to increase their use of private motorcycles and scooters, while 18 percent expect to use their micromobility vehicles (such as bicycles and e-scooters) more in the future. Not only do consumers expect to rely even more on two-wheelers, but for most, the next two-wheeler is electric: 86 percent of consumers would consider buying an electric two-wheeler, while only 69 percent would consider a combustion engine vehicle.
When purchasing their next two-wheeler, Indian consumers are thinking most about vehicle brand, safety, and sustainability (Exhibit 1). Consumers continue to trust incumbents; however, they’re also willing to embrace newcomer EV companies. This is evident from the fact that today, approximately more than 50 percent of the electric–two-wheeler market is dominated by new attackers. This is in significant contrast to the internal-combustion engine two-wheeler market, where incumbents continued to dominate more than 90 percent of the market over the past several decades.
1
Some of these criteria align closely with our research on four-wheeler EVs , which also showed battery life, battery safety, and charging speed within the top ten most important consumer criteria for the electrification of cars. Some of the same concerns are relevant for electric two-wheelers, as well. Concerns about battery life reflect overall concerns about charging-infrastructure readiness: 35 percent of consumers feel that their area lacks a sufficient charging-infrastructure network. This perceived lack of infrastructure is important given that more than half of consumers (58 percent) feel the need for public charging. Hence, better penetration of public chargers, along with adequate safety protocols, could be pivotal to fast-track this journey.
Moreover, our research shows that many Indian customers are ready to perform most of their vehicle purchase journey—from searching to scheduling delivery—with the convenience of their smartphones or laptops via OEM-led apps or websites. For instance, more than 85 percent of consumers are starting their journey online, and about 50 percent are willing to purchase vehicles online (Exhibit 2). About 70 percent of consumers have started valuing the convenience of at-home delivery, at-home test-drives, and on-demand service. And while consumers are willing to go online, more than 80 percent of them still share the continued need for a physical touchpoint, cementing the role of channel partners and leading to emerging omnichannel solutions.
2
As such, newer business models such as hybrid direct-to-consumer are starting to emerge in India. These models provide OEMs the opportunity to own the customer experience while existing channel partners continue to play a pivotal offline (though digitally integrated) role. However, these shifts mean that both OEMs and dealers need to significantly expand their capabilities to provide consumers a seamless experience. They also need to clearly demarcate their roles and responsibilities in the overall consumer purchase and postpurchase journey.
The demand for flexible access will continue to increase as preferred ownership shifts from outright purchasing to financing, leasing, subscription, pay-per-use, and other models. For their next two-wheeler, 78 percent of consumers would currently opt for outright purchase. However, in the next ten years, that number drops to 63 percent (Exhibit 3). Indeed, alternative ownership forms such as financing, subscription, and leasing are on the rise—though this trend is moving slower for electric two-wheelers than for standard EVs, potentially because of lower purchase cost.
3
When consumers do think about purchasing an electric two-wheeler outright, most prefer premium “functional” features, such as higher speed and larger battery pack—and they are willing to pay for those functional upgrades. Most consumers already purchase electric two-wheelers with a top speed of 80 kilometers (km) per hour (39 percent). Half of consumers would be willing to pay up to 10,000 rupees ($120) to upgrade their electric two-wheeler to a higher speed (from 80 km per hour to 100 km per hour).
Range is also important for electric two-wheeler customers, and the majority prefer the largest battery pack. Ninety percent of purchasers would opt for more than 80 km per charge. In fact, nearly half (45 percent) would be willing to pay up to 10,000 rupees to upgrade from a range of 100 km to a range of 120 km.
There’s no doubt that Indian consumers’ interest in electric two-wheelers is rising. And this interest comes with clear and shifting preferences regarding features, ownership options, and evolving purchase journeys. Manufacturers of electric two-wheelers will want to keep these shifting expectations and preferences in mind to capitalize on the market dynamics resulting from electrification in the years to come.
Two-wheeled vehicles like motorcycles, mopeds and scooters represent the largest segment of road transport, with global sales reaching 82 million in 2021. This segment accounted for less than 5% of global carbon dioxide emissions from road transport in the past decade and is one of the vehicle segments closest to achieving zero tailpipe emissions by 2050, according to BloombergNEF’s Electric Vehicle Outlook 2022.
BNEF’s latest electric vehicle outlook compares two scenarios. The Economic Transition Scenario (ETS) explores the economics-led adoption trends of zero-emission two-wheelers but doesn’t take into account any new policies or manufacturer commitments. The Net Zero Scenario (NZS) investigates a pathway to reach a fully zero-emission two-wheeler fleet globally by 2050 through economic analysis of competing technologies in the segment.
Electric Vehicle Outlook 2022 Learn more
EVO2022 shows electrification is a cost-effective route to reduce carbon emissions from two-wheelers, while other technologies like hydrogen fuel cells, synthetic fuels, or internal combustion engines with carbon capture aren’t projected to be economically competitive. BNEF expects all zero-emission two-wheelers to be battery electrics in the future.
In EVO’s ETS, electric vehicles rise to a 74% share of the global two-wheeler fleet in 2050, from 20% in 2021. Despite the progress in electric sales, time is needed for the fleet to reflect the change. Sales of two-wheelers based on internal combustion engines (ICE), for example, rebounded in 2021 while slow retirement rates are keeping more ICE vehicles on the road.
Today, the speed and scale of electric two-wheeler adoption varies greatly by country. Policy makers need to take immediate actions to support electrification of this segment in order to stay on track for net zero by 2050, particularly in countries where the use of two-wheelers is prevalent, such as China, India, Indonesia and Vietnam.
China accounted for 53% of global two-wheeler sales in 2021, with electric comprising 70% of the 39 million two-wheelers sold in the country. Implementation of new e-bike standards has been a major sales driver as e-bike owners are propelled to switch to vehicles that comply with new standards.
In ETS, China’s electric two-wheeler sales increase to 33 million units in 2025, from 30 million in 2021, driven by booming food and last-mile delivery business, city-level enforcement of new e-bike standards and a shift in demand from public transport to private vehicles in the wake of the pandemic. Falling battery prices, expanding EV lineups and the rise of battery swapping continue to drive up EV adoption over the next three decades. Nearly all new sales are electric after 2035.
Even without a further push, EVs in China account for almost all new sales of two-wheelers in the mid-2030s and 91% and 99% of the two-wheeler fleet by 2040 and 2050 in ETS, respectively. The country can potentially end sales of ICE two-wheelers earlier, with stricter emission requirements and local zero-emission zones. This also suggests other markets must step up efforts to eliminate ICE vehicles.
India and Southeast Asian countries, like Indonesia and Vietnam, are major two-wheeler markets after China, while African countries see some of the highest sales growth. Despite booming demand in this segment, many countries are just beginning to adopt EVs, and governments often offer few direct financial incentives for electric two-wheeler purchase and usage. Sales of ICE two-wheelers will recover strongly in the near term, keeping the EV share of total sales below 10% by 2025.
Still, support for local EV manufacturing, like India’s $3.5 billion ‘production-linked incentive’, can help boost manufacturers’ interests. Pure EV manufacturers such as Ola Electric, as well as conventional manufacturers like Hero MotoCorp and TVS Motor are planning to bring more electric models to the market. Declines in battery prices drive down the upfront cost of electric two-wheelers, making them competitive with their ICE counterparts in markets outside China after 2025. Coupled with an expansion of charging and battery swapping infrastructure, electric two-wheeler sales grow rapidly between 2025-2040.
Around 76% of two-wheelers sold in India and Southeast Asia are electric in 2040 in ETS, while other emerging markets like Latin America and South Asia (excluding India) see EV share of sales rise to 66%. EVs account for some 26%-36% of total two-wheeler fleets in those markets by 2040 and 55% to 77% by 2050.
To reach 2050 net-zero targets, the electric two-wheeler fleet needs to expand in emerging markets at a compound average growth rate of 20% annually between 2021 and 2050 in NZS, which is 1.5 times the growth achieved over the past decade.
Developed markets such as Europe, Japan and South Korea are much smaller in terms of sales volume. Two-wheelers aren’t a primary transport mode and demand was on flat or on a downward trajectory prior to the Covid outbreak. With the boom in outdoor recreation, shifts in personal mobility preference and a shortage of passenger cars, two-wheeler sales rebounded in 2021 by 3% to 15% across wealthier countries. Still, they represent less than 3% of global sales and 5% of the global fleet between 2022-2025.
South Korea stands out with the EV share exceeding 28% by 2025, while Europe sees 16% of new sales to be electric in the same period in ETS. A production ramp-up and expanding product lineup from electric two-wheeler companies, combined with government subsidies, are some key enablers in those markets.
In North America, Japan and Australia, sales of electric two-wheelers are limited, with less than 5% of total two-wheelers sold being electric by 2025. EV sales grow steadily over the next two decades. By 2040, some 15% to 26% of two-wheelers on the road are electric in ETS. By 2050, the EV share increases to 48% to 67%. Improvements in electric two-wheeler performance, falling costs and growing interest from leading manufacturers like Harley-Davidson, Honda and Yamaha may help accelerate the adoption. Still, there is a large gap between the ETS and the Net Zero Scenario, prompting calls for more urgent policy action and more ambitious ICE phaseout targets from policy makers in those regions.
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