Focus on E-Motorcycles

While the electric vehicle and battery markets command global attention, an equally dynamic and swiftly expanding sector is the electric motorcycle market. Electric vehicles are capturing intense media and investor focus, particularly in affluent and select middle-income nations where the market is burgeoning. However, in emerging economies such as China, India, Indonesia, and Vietnam—where income levels are relatively lower but growth rates are among the world's highest—electric motorcycles are emerging as the next frontier in transportation.

Since 2012, China has diligently cultivated its electric vehicle and electric motorcycle market, backed by substantial support from the central government. This initiative has been centered around Shenzhen, China's pioneering open city, positioning China as a leader in the electric motorcycle domain, claiming a staggering 90% share of the global market.

India, though not matching China's pace yet, is experiencing explosive growth and is poised to rival China in the electric motorcycle realm. According to the Automobile Association of India, out of the 12.63 million motorcycles sold in India in 2022, 840,000 were electric—a modest 6.7% of total motorcycle sales. 

However, forecasts suggest a dramatic shift, with electric motorcycles projected to capture over 30% of the market share soon. McKinsey's report titled “True electric transportation comes from two-wheeled vehicles,” published in August 2023, anticipates over 3 million electric motorcycle sales in India by 2030. Similarly, Bain & Company's December 2022 report predicts annual sales of 13 million units, including electric bicycles, by the same year. Unlike China, where the market is transitioning towards electric vehicles due to rapid income growth, India is expected to experience an explosive expansion in the electric motorcycle market.

[Indonesia is working to create an electric transportation ecosystem]

In Indonesia, hailed as the largest motorcycle kingdom in ASEAN, the sale of approximately 10,000 electric motorcycles in 2022 represented less than 2% of the total 5.22 million motorcycles sold. Despite this modest beginning, the Indonesian government is optimistic about the future, projecting annual sales of over 1.9 million electric motorcycles by 2030. To achieve this ambitious goal, Indonesia aims to bolster its electric motorcycle manufacturing sector, with plans to produce a staggering 12 million electric motorcycles annually by 2030.

Indonesian President Joko Widodo riding an electric motorcycle at the International Motor show 

In March 2023, the Indonesian government unveiled a comprehensive plan, earmarking a budget of 7 trillion rupiah to provide substantial support to consumers. This included offering 7 million rupiah in assistance to 800,000 individuals purchasing new electric motorcycles and aiding 200,000 others in converting existing internal combustion engine motorcycles to electric models. However, the initial implementation faced significant hurdles. Targeted primarily at small business owners and low-income earners eligible for work incentives, the program faltered, with fewer than 1,000 individuals availing themselves of the subsidies by July. Additionally, the complexity of electric motorcycle registration processes deterred many prospective buyers.

Responding swiftly to these challenges, the Indonesian Ministry of Commerce, Industry, and Energy introduced remedial measures on August 29. Simplifying the registration procedures for electric motorcycles and broadening the subsidy eligibility criteria to encompass all Indonesian citizens above the age of 17, the government aims to stimulate adoption. Emphasizing the substantial energy and cost savings—up to 70%—offered by electric motorcycles compared to their internal combustion engine counterparts, the Indonesian Ministry of Energy seeks to further incentivize their uptake.

Further catalyzing the sector's growth, the Indonesia Battery Corporation (IBC) made strategic moves, acquiring a stake in electric scooter manufacturer Gesits. With a vision to capture a 30% share of the Indonesian electric motorcycle market, IBC endeavors to ramp up annual production capacity from the current 40,000 units to an impressive 100,000 units within a few years.

[Vietnam electric motorcycle market growing]

Vietnam stands as the motorcycle kingdom of the ASEAN continent, with a vibrant electric motorcycle market rapidly gaining momentum. With an annual sale of 3 million motorcycles in a population of 100 million and over 65 million registered motorcycles as of 2022, Vietnam presents a fertile ground for electric vehicle adoption. The sector is poised for explosive growth, buoyed by U.S. President Biden's pledge of support for Vietnam's electric motorcycle business during his visit last September.

Leading the charge in Vietnam's electric motorcycle market is Vinfast, renowned for its electric vehicle manufacturing prowess. While initially focused on electric vehicles, Vinfast has shifted its attention to electric motorcycles, spurred by anticipated U.S. support. Additionally, electric motorcycle startups like Dat Bike, which received personal endorsement from U.S. Agency for International Development Director Samantha Power, and Selex, highlighted during U.S. Secretary of State Janet Yellen's visit to Vietnam, are attracting significant investments, fueling market expansion.

China's Yadea, the world's largest electric motorcycle manufacturer, is making substantial investments in Vietnam's potential. In January 2023, Yadea announced a $100 million investment in Bac Giang Province, northern Vietnam, to establish a factory capable of producing 2 million electric motorcycles annually. However, despite the burgeoning interest, there is currently no government policy at the Vietnamese level aimed at boosting electric motorcycle demand.

Nevertheless, signs of change are on the horizon. On September 7, Vietnam's Ministry of Finance opposed the Ministry of Transport's proposal to subsidize $1,000 for electric vehicle purchases, citing concerns over favoritism towards minority groups. As Vietnam's per capita income surpassed $4,000 in 2022, there's an expectation for support measures to democratize access to electric vehicles, benefiting a broader segment of society. Indeed, on July 11, Ho Chi Minh City announced plans to introduce electric vehicle subsidies starting in 2024, with specific support measures set to be unveiled by year-end.

[Obstacles to overcome]

Indeed, despite the promising growth of the electric motorcycle market in Vietnam and Indonesia, several obstacles hinder widespread adoption among citizens. Foremost among these challenges is the glaring lack of electric charging infrastructure. Without a robust network of charging stations, consumers are understandably hesitant to invest in electric motorcycles, fearing the inconvenience of finding suitable charging points.

Electric motorcycle charging station installed by VinFast in Vietnam_Source VinFast

Moreover, the availability and reliability of electricity resources pose a critical concern in countries like Vietnam and Indonesia, where infrastructure development lags behind demand. Ensuring a seamless charging experience for electric motorcycles hinges on addressing these underlying issues of power generation and distribution.

Additionally, consumer preferences play a significant role in shaping market dynamics. Many Vietnamese and Indonesian citizens remain loyal to well-established global motorcycle brands like Honda and Suzuki, viewing startups and lesser-known companies with skepticism. Overcoming this hurdle requires building trust and credibility in new brands through effective marketing strategies and quality assurance measures.

To address these challenges effectively, a targeted approach focusing on specific cities is paramount. By establishing comprehensive electric motorcycle ecosystems in key urban centers, governments and industry stakeholders can showcase the benefits of electric mobility while addressing infrastructure limitations. Gradually expanding these initiatives to encompass other regions allows for organic growth and cultivates consumer confidence in electric motorcycles as a viable mode of transportation.