India's EV Startups Face Doomsday as Giants Crush Dreams

Indian electric two-wheeler market dominated by traditional automakers

The Relentless Rise of Traditional Automakers in the Electric Two-Wheeler Market

The electric vehicle (EV) two-wheeler industry in India, once a thriving hub for innovative startups, is now witnessing a seismic shift as traditional automakers like Bajaj Auto and TVS Motor assert their dominance, leaving smaller players scrambling for survival. Analysts at Bernstein have issued a stark warning: while many Indian electric vehicle startups are still chasing ambitious public listings with aggressive valuations, their long-term viability hangs by a thread. What began as a promising revolution driven by nimble newcomers capitalizing on government subsidies and first-mover advantages has morphed into a brutal battleground where scale, distribution networks, and policy incentives favor established giants. This in-depth exploration dives into the current state of Indian EV two-wheeler startups, their mounting challenges, and why traditional manufacturers are poised to claim the lion’s share of this electrified future.

The Golden Era of Indian Electric Vehicle Startups Fades Away

In the early days of India’s EV boom, startups like Ola Electric, Ather Energy, and Hero Electric seized the spotlight, riding a wave of government-backed subsidies under schemes like FAME II and a growing consumer appetite for sustainable mobility. These Indian electric vehicle startups disrupted the two-wheeler market with bold designs and cutting-edge technology, quickly gaining traction in a fragmented landscape. By January 2024, over 150 such companies had emerged, fueled by the promise of a green revolution and investor enthusiasm for India’s electric two-wheeler market growth. Sales figures reflect this surge, with electric two-wheelers hitting 859,269 units in 2023, a 36.07% jump from 631,476 units in 2022, according to Moneycontrol. Meanwhile, the market’s value soared, with TechSci Research pegging it at $621.11 million in 2024, projected to skyrocket to $3,391.52 million by 2030 at a staggering CAGR of 32.70%. Yet, beneath this meteoric rise, cracks were forming. The initial edge these startups enjoyed, built on innovation and agility, began to erode as traditional automakers woke up to the EV opportunity. Companies like Bajaj Auto, with its iconic Chetak scooter reborn as an electric marvel, and TVS Motor, with its iQube model, started leveraging their decades of manufacturing expertise, vast dealership networks, and deep pockets. Bernstein analysts note that while these incumbents may lack the flashy appeal of startup offerings, their “boring and uninspiring products” are winning over consumers through superior reach, better servicing, and a perception of safety, key factors driving their resurgence in the Indian electric two-wheeler market.

Traditional Automakers Tighten Their Grip on Market Share

The numbers tell a grim tale for Indian EV two-wheeler startups. Market consolidation has accelerated, shrinking the playing field from over 150 players to a handful of dominant forces. As of December 2024, just four companies control over 80% of the market, with Bajaj Auto commanding a 27.7% share and TVS Motor close behind at 22%, per CNBC TV18. Together, these two giants account for nearly 50% of sales, a stark contrast to the earlier days when Ola Electric held a 21% share in FY2023, according to Statista. Ola’s slice has since slipped to 18%, underscoring the relentless advance of traditional manufacturers. What’s fueling this shift? Established automakers bring unparalleled advantages to the table. Bajaj Auto, for instance, has invested heavily in scaling production, targeting 500,000 EVs annually, while TVS benefits from a nationwide network of dealerships built over decades. Both companies tap into the Production-Linked Incentive (PLI) scheme, a government initiative launched in 2021 with a $3,112 million outlay to boost domestic manufacturing of advanced automotive technologies. This policy, designed to favor companies with significant investment and production capacity, gives traditional players a financial lifeline that most startups can’t access. Add to that competitively priced models, like the Chetak outselling Ola Electric’s offerings (6,900 units versus 4,900 in two weeks in December 2024), and it’s clear why the Indian electric two-wheeler market is tilting heavily in their favor.

Financial Woes Plague Indian EV Two-Wheeler Startups

For most Indian electric vehicle startups, the financial picture is dire. Operating at a loss has become the norm, with capital constraints and fierce competition squeezing their margins. Ather Energy, a prominent player, saw its revenue climb to $213 million (Rs 1,783 crore) in FY23 from $49 million (Rs 408 crore) in FY22, but its net losses ballooned to $103 million (Rs 864 crore) from $41 million (Rs 344 crore), per Entrackr. Ola Electric, another high-profile name, posted an operating loss of $136 million on $335 million in revenue during the same period, according to The Economic Times. These figures highlight a harsh reality: scaling up in the Indian EV two-wheeler industry demands vast resources, and many startups are burning cash faster than they can raise it. Bernstein analysts underscore this struggle, noting that “most startups are grappling with losses, capital constraints, scale, and limited market reach.” Unlike traditional automakers, which can lean on profits from their ICE (internal combustion engine) portfolios and PLI support, startups lack a financial safety net. The reduction of FAME II subsidies in mid-2023 further tilted the scales, making it harder for them to compete on price. Time, too, is an enemy. As Bernstein warns, “By the time they manage to scale and establish a solid offline presence, much of the market may have already been claimed.” This urgency amplifies the challenges facing Indian EV two-wheeler startups, pushing them to the brink as giants solidify their foothold.

Investor Caution Amid Aggressive Valuations

Despite these headwinds, some Indian electric vehicle startups are eyeing public markets, hoping to cash in on investor optimism with aggressive valuations. Bernstein, however, urges caution. “Investors should tread carefully while assessing these models. Don’t be swayed by lower valuation ask or the allure of trading momentum based on the belief that these startups will transition from losses to profitability,” the analysts advise. The allure of India’s electric two-wheeler market growth is undeniable, but the path to profitability remains elusive for most new entrants. Ather’s cash outflows from operations, for instance, spiked 3.8X to $104 million (Rs 870 crore) in FY23, with a return on capital employed (ROCE) of -83.98%, signaling deep financial strain. Meanwhile, the likelihood of acquisitions remains low. Few startups offer unique technological or cost advantages that would tempt buyers, leaving them with limited exit options. Bernstein’s blunt assessment—“We do not consider any unlisted startup a safe investment”—casts a shadow over the sector, suggesting that the opportunity in India’s EV space is shifting decisively toward traditional manufacturers.

Niche Players and the Road Ahead for Indian EV Startups

Amid this consolidation, a few Indian electric vehicle startups, like Ultraviolette with its high-performance F77 motorcycle, show glimmers of hope by carving out niche markets. Yet, the broader ecosystem struggles with a lack of competitive differentiation. Bernstein expects most startups to falter as scaling proves insurmountable, with many likely to exit the market altogether. This grim outlook contrasts sharply with the early optimism that fueled their rise, when subsidies and first-mover status seemed like a golden ticket. For context, the total two-wheeler market in India (including ICE models) saw sales of roughly 17,927,158 units in 2023, per SIAM data inferred from market reports. Electric two-wheelers, at 859,269 units, represent about 4.8% of this total by volume, though their higher price points (around $1,500 versus $1,000 for ICE models) push their value share closer to 7-8%. As traditional automakers expand their EV portfolios, this share is increasingly slipping from startup hands. The table below compares key players’ market share and financials, illustrating the stark divide:

Company	Market Share (Dec 2024)	Revenue FY23 ($ Million)	Net Loss FY23 ($ Million)
Bajaj Auto (Chetak)	27.7%	Not publicly detailed	Not publicly detailed
TVS Electric	22.0%	Not publicly detailed	Not publicly detailed
Ola Electric	18.0%	335	136 (Operating Loss)
Ather Energy	Not specified	213	103

Why Traditional Automakers Are the Future of India’s EV Market

The dominance of traditional automakers in the Indian electric two-wheeler market isn’t just about resources; it’s about strategy. Their ability to blend EV production with existing infrastructure, tap into government incentives, and meet consumer demands for reliability and affordability gives them an edge that startups can’t easily replicate. Bajaj’s Chetak, for example, leverages nostalgia and trust, while TVS’s iQube appeals to practicality. As these giants roll out new models and expand dealerships, they’re not just catching up—they’re pulling ahead. For investors and consumers alike, the message is clear: the Indian EV two-wheeler industry is no longer a startup playground. While a handful of innovators may survive by targeting niche segments, the bulk of growth and stability lies with established names. The dream of a startup-led electric revolution may be fading, but the rise of traditional automakers signals a new chapter—one where scale, experience, and adaptability reign supreme in India’s electrified future.

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