By Nicolas Jacob, fund manager ODDO BHF Green Planet.
In 2021, global sales of two-wheelers reached 82 million units, of which 31 million (37%) were electrified (bicycles, scooters). Today and until 2025, around 90% of sales are concentrated in China, a market driven by new anti-pollution standards in many megacities. India is the second largest market with 230,000 units sold by 2021, ahead of Vietnam, Indonesia and Thailand. Despite growth of 25% in 2021, Europe is still far behind Asia in terms of electric two-wheel penetration. As for North America, Australia and Japan, the market is still in its infancy and is essentially focused on electric bikes.
In its “Economic Transition Scenario”, taking into account existing or announced regulations, BloombergNEF estimates the size of the addressable market at 80 million units by 2040, representing an average annual growth rate of around 8%. While the Chinese market, which is already well equipped, is expected to stagnate between 2030 and 2035, India and South East Asia will drive growth until 2040, reaching penetration rates of around 75%. In a Net Zero 2050 scenario (conditional on a more pronounced tightening of regulation and a phase-out of combustion engines between 2035 and 2040), the average annual growth rate excluding China would reach 20% by 2050.
Beyond regulation, other catalysts are likely to support the growth of the electric 2-wheeler market:
- Ease of recharging, as most recharging can be done on the existing low-power electrical grid, unlike 4- wheel electric vehicles that depend on the deployment of dedicated infrastructure;
- The technological evolution of small batteries, from lead-acid to lithium-ion batteries, which have a longer life, better energy density and lower weight;
- The growing product offering with a growing number of manufacturers in China (Yadea, AIMA, NIU, Tailling, Luyuan) and the traditional Japanese 2-wheeler players accelerating their transition. In Europe and North America, the offer remains very limited for the moment and concentrated on the top of the range.
Finally, the development of the electric two-wheeler market (assuming that it replaces four-wheeled vehicles for short-distance travel) can be virtuous in terms of the exploitation and availability of natural resources needed to manufacture batteries. For example, the amount of lithium needed for a small battery is 90 times less (electric scooter) to 180 times less (electric bicycle) than that needed for a car battery.
