Electric two wheeler industry report – the development and challenges

The electrification and intelligence of automobiles has brought consumers a new driving experience and reshaped the automobile industry chain. The electric two wheeler industry has also benefited from the dividends of automobile technology, and the entire supply chain has realized intelligence and electrification upgrade.

Coupled with factors such as low-carbon environmental protection, electrification, intelligence and green travel, as well as practical factors such as continuous rise in fuel prices and traffic congestion, the electric two wheeler industry has achieved sustainable growth potential.

Current status of the electric two wheeler industry

China market

China is the largest market of electric two wheeler industry in the world, accounting for about 80% of the global market. In 2022, China’s market ownership of electric two wheelers has reached 350 million. Different from Europe and USA, electric two wheelers in China are mainly used as a main means of transportation for short and medium distance travel.

Southeast Asia market

The prosperity of e-commerce has driven the rapid growth of the express delivery industry. According to conservative estimates by institutions, the scale of the local express delivery market in Southeast Asia will exceed US $41 billion in 2025, and the volume of e-commerce express parcels will exceed 20 billion, about 1/5 of China’s e-commerce express volume.

At the same time, The total GMV of the Southeast Asian food delivery market will reach 16.3 billion US dollars in 2022, and the CAGR has exceeded 15% in the past three years. China’s JT Express, SF Express, and other express industries have seized the Southeast Asian market. JT is currently the largest express delivery company in Southeast Asia in terms of e-commerce volume and it has 100,000 couriers in Southeast Asia.

Comparing the volume of express orders in China and Southeast Asia, and considering the market in Southeast Asia, it is estimated that the demand for instant delivery of two wheeler industry will exceed 2 million by 2025.

Factors affecting the electric two wheeler industry

Intelligence demand
On the basis of performance requirements such as battery life and power, the individual requirements of intelligence and multiple scenarios have become important factors affecting consumers’ purchase decisions. In recent years, the level of intelligence such as smart car/mobile user system and third-party device connection has been qualitatively improved, and the penetration rate has continued to deepen.

The mature ADAS (Advanced Driver Assistance Systems) in the field of automotive autonomous driving has also begun to be applied, improving the electric two wheeler industry users’ driving experience. Users have increasingly strong demand for smart products and are willing to pay a higher premium. The increase in consumer demand continues to promote two wheeler industry transforming to high-end, opening up room for structural growth in the industry.

Personalized user scenarios
In addition to daily high-frequency scenarios such as urban commuting and other transportation connections, consumers’ demand for electric two wheelers also extends to personalized travel scenarios such as mountain running, off-road, and social riding.

The scenarios of going out for leisure and entertainment accounts for a larger proportion in the high-priced wheeler owners, which also reflects the intelligence of various products. Consumers’ positioning of electric two wheelers is no longer limited to travel tools, but has gradually expanded to symbolize leisure, interest, sports and even fashion lifestyles, and even undertake consumers’ expectations of social communication.

B-end scenario growth
The data shows that in 2021, the order volume of China’s instant logistics industry will be 29.4 billion, with a year-on-year growth rate of 38%, and the number of users will reach 633 million. The revenue of express delivery business was 1,033.23 billion RMB. The business volume of nearly 30 billion orders has exceeded a quarter of the express delivery market. It is estimated that by 2025, the order volume of the instant logistics industry will reach 79.3 billion orders.

There are more than 8 million couriers and 420 million users in real-time delivery industry. The main tools of transportation are electric two wheelers, which require a lot of electric two wheelers (2-3 year of replacement cycle) and batteries, which is a new growth point of electric wheelers and batteries. It is estimated that the demand for instant delivery will exceed 8 million vehicles by 2025.

At the same time, although the shared motorcycle market is still in the early stage of development, major platforms are gradually increasing their investment. In 2021, the number of shared motorcycles was 3.82 million and it is expected that by 2025, the number of shared motorcycles will reach 8 million units.

Trends of battery swapping mode

Electric bicycle sharing and battery swapping is a new industry emerging in the field of new travel formats. The rise of two wheeler battery replacement comes from the pain points of safety risks and charging difficulty of electric bicycles. The huge stock market and fast-growing incremental market make the battery swapping business full of imagination.

In different application areas of two wheeler industry, the penetration rate of battery exchange services varies greatly. Among them, To B-end such as sharing and food delivery have high requirements for operational efficiency, and the supporting lithium-ion batteries have a relatively high degree of standardization and strong adaptability, and the corresponding battery exchange service penetration rate is significantly higher than that of individual users.

Affected by factors such as the incomplete battery swap system and inadequate follow-up services, the current penetration rate of battery swapping is only about 25%. Users at the To C-end use their cars less frequently than at the To B-end, and they have not yet formed a habit of swapping batteries , so the current battery replacement penetration rate is only about 4%.

According to the data, in the B-end market, in 2021, the demand for B-end riders’ battery swapping cabinets in China’s two-wheeler battery exchange market will be 280,000, and it is expected that the demand will reach 810,000 by 2025. The demand for user battery exchange cabinets will reach 7.5 million.

The scale of the battery swapping market is mainly composed of the battery market, the battery swapping cabinet market, and the battery swapping service fee market. At present, the two wheeler battery swapping market is still in the early stages of development, and the market scale is relatively small. In 2020, the scale of China’s two wheeler battery exchange market was about 16.18 billion RMB with the effort of top 10 two-wheeler battery swapping companies in China.

International prospects of the two wheeler industry

The mountainous and rugged terrain and relatively low per capita income make motorcycles the most important tool of travel for Southeast Asian residents. Southeast Asia is the second largest motorcycle market in the world after China, accounting for about 25% of the global total.

In Vietnam, more than 20 million motorcycles gallop in towns and villages every day. In 2019, Indonesia, Thailand, Vietnam and Malaysia had a total of about 150 million vehicles. At present, India and ASEAN countries encourage consumers to replace fuel motorcycles with electric two wheelers.

In 2022, the sales volume of fuel motorcycles in Southeast Asia exceeded 12 million. Motorcycle sales in Southeast Asia were mainly concentrated in Vietnam, Thailand, and Indonesia. The sales volume in 2022 was 3.00, 1.79, and 5.22 million units respectively, totaling more than 10 million units, account for 24%, 15%, 43%, and 83% respectively . Considering that consumers’ economic capacity was affected by the epidemic in 2020-2022, the annual sales volume of motorcycles is expected to reach 15 million.

In addition, the cost of using electric motorcycles is lower than that of fuel motorcycles, and the potential for cost reduction is greater. It is expected that consumer demand will further expand, and we expect to bring about 5 million new demand for electric motorcycles. The alternative space for electric motorcycles in the motorcycle market is 1500+500=20 million units.

Fuel motorcycles are one of the main sources of air pollution. With the promotion of global energy conservation and emission reduction, countries will continue to introduce restrictions on motorcycle bans. At the same time, the development of new energy vehicles drives the continuous development of electric technologies and electric two wheeler industry. Electric motorcycles have cost-effective and performance advantages. Continue to improve and further accelerate the electrification of motorcycles.

In 2020, the penetration rates of electric two wheeler industry in Vietnam, the Philippines, Indonesia, and Thailand were only 8.54%, 1.34%, 1.1%, and 0.1%. Among them, Vietnam’s electrification rate in 2020 increased by 3.4% year-on-year. Chinese brands have the advantages of mature industrial chain and capital for large-scale expansion.

A complete product sequence with both performance and production tools will be sold in the global market, especially the Southeast Asian market. The new forces of electric motorcycles represented by China will open up new global growth space.

According to Statista data, the average price of the most popular road motorcycles and scooters in Southeast Asian countries in 2020 was about $4,010 and $1,310, and the unit price of motorcycles was almost twice that of China, while the average price of electric vehicles was $54,000. The trend of form oil to electricity has promoted the development of electric two wheeler industry, and compared with expensive electric vehicles, electric two wheelers are more in line with the purchasing level of residents in India and Southeast Asian countries.