The market for electric-powered two-wheelers (E-PTWs) is experiencing strong growth in developed regions, fueled by the increasing adoption of personal mobility solutions. In Europe and North America, there is a notable rise in the popularity of E-PTWs as individuals actively seek sustainable and efficient modes of personal transportation. Additionally, in 2021, developed economies in the Asia-Pacific region, including Japan and South Korea, witnessed significant growth in two-wheeler sales ranging from 3% to 15%. This surge can be attributed to the increasing interest in outdoor recreation, a shift in personal mobility preferences, and a shortage of passenger cars.
South Korea stands out in this evolving landscape, projecting an electric vehicle (EV) share exceeding 28% by the year 2025. Simultaneously, Europe is anticipating that 16% of new sales will be electric by the same period under the Economic Transition Scenario (ETS). To meet these ambitious targets, countries are actively increasing production activities, diversifying the product lineup offered by electric two-wheeler companies, and benefiting from favorable government subsidies. These concerted efforts are contributing to the promising growth exhibited by these regions in the electric two-wheeler market.
In China, electric vehicles (EVs) are projected to constitute nearly all new sales of electric two-wheelers by the mid-2030s. Furthermore, it is anticipated that EVs will make up 91% and 99% of the two-wheeler fleet by 2040 and 2050, respectively. China is planning to halt the sales of internal combustion engine (ICE) two-wheelers sooner by implementing stricter emission requirements and establishing local zero-emission zones. This underscores the need for other markets to intensify their efforts in phasing out ICE vehicles.
In North America, Japan, and Australia, electric two-wheeler sales are limited, with less than 5% of total two-wheelers sold being electric by 2025. Despite steady growth in EV sales over the next two decades, reaching 15% to 26% by 2040 and 48% to 67% by 2050, there remains a significant gap between the economic transition scenario (ETS) and the Net Zero Scenario. Therefore, the governments of developed nations are undertaking urgent policy action and more ambitious ICE phase-out targets in these regions to bridge the gap. Furthermore, initiatives by leading manufacturers such as Harley-Davidson (U.S.), Honda (Japan), and Yamaha (Japan), along with improvements in electric two-wheeler performance and falling costs, are expected to contribute to the accelerated adoption of E-PTWs in the developed economies.
The growth of the electric scooters market is significantly driven by the potential of electric two-wheelers to alleviate urban traffic congestion and reduce pollution. These agile vehicles serve as a sustainable alternative to traditional transportation methods, promoting eco-friendly commuting in densely populated city environments. Electric scooters play a crucial role in mitigating traffic congestion by efficiently navigating through crowded streets and, concurrently, contribute to a substantial reduction in air pollution, fostering the development of a green economy.
Governments worldwide are recognizing the potential of electric two-wheelers and are actively supporting market players in increasing the production of Electric Powered Two-Wheelers (EPTWs). A notable example is the Government of India, which, in October 2021, introduced a Production Linked Incentive (PLI) scheme. This initiative allocates a significant amount of USD 3.5 billion (INR 260.0 billion) to encourage the manufacturing of two-wheelers and related components in the automotive sector. It's worth noting that this supply-side initiative includes Electric Vehicles (EVs) and is in addition to the previously sanctioned PLI scheme of USD 2.6 billion (INR 181.0 billion) for advanced chemistry cell (ACC) battery manufacturing. Such government initiatives not only support the industry but also create lucrative revenue channels for market players in the electric scooters sector.
Moreover, the fleet electrification targets by governments of several countries are increasing the adoption across the region. For instance, in March 2020, the Thailand Ministry of Industry planned a motorcycle trade-in scheme for consumers, subsidizing it with USD 475 per motorcycle from a planned budget of USD 23.7 million. In February 2020, Malaysia updated its National Automotive Policy with the inclusion of electric vehicles as Next Generation Vehicles (NxGV) that includes automation. However, the incentives and support offered to electric two-wheelers are not notified. Furthermore, Indonesia Automotive 4.0 explicitly refers to the production of electric two-wheelers, and the government is setting a phase-out plan for conventional motorcycles from 2025. Indonesia Automotive 4.0 includes the production targets for electric motorcycles as 10% out of 8 million units in 2020, 20% out of 10 million in 2025, 25% out of 12.5 million in 2030, and 30% out of 15 million in 2035.
Governments are increasingly emphasizing emission reduction and urban planning and are prioritizing eco-friendly alternatives. Consequently, players in the electric scooters market are gradually establishing themselves to meet the rising demand for efficient, sustainable, and congestion-alleviating two-wheeled electric transport solutions. Environmental consciousness, technological advancements, and urban planning prerequisites position electric scooters as not just vehicles but as integral components in shaping the future of urban mobility.
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