Poor Indian Villagers Hit the Road on Electric Two-Wheelers

India electric bikesSULUR VILLAGE, India — For Aaruchamy Mayilchamy, the desperate yearning for modern transportation began last year, when the 62-year-old could no longer bear the pain in his knees after decades of cycling on bumpy countryside roads.

But switching to a non-man-powered vehicle is not an easy matter in rural India. Bus companies do not operate there, and villagers like Mayilchamy can’t afford a private car. Plus, he is too old to get a driver’s license.

The homoeopathy doctor thought he would not be able to continue his journey to treat patients. Then, nine months ago, he passed by an electric vehicle showroom in a nearby town. Mayilchamy went in for a demonstration and went out with an electric bike. Now, he is among a small yet growing population in India that rides around on battery-powered vehicles.

India’s electric vehicle industry is tiny even by the standards of the fledgling global market. The only four-wheeled electric vehicle manufacturer is Mahindra REVA, which has sold 2,500 cars domestically since it started business in the 1990s. While motorcycles and scooters are popular in India, electric two-wheeler makers face a hard sell.

Ampere Vehicles Pvt. Ltd., for one, launched a $1 million advertising campaign in 2009 in big cities like Bangalore and Chennai for recruiting new dealerships and marketing its products. The result: A total number of five vehicles were sold.

Motorcyclists’ desire for speed and their fear that the electric vehicle will run out of power before reaching the destination have been major factors in blocking sales, explained Bala Pachyappa, chief technology officer of Ampere. “We were also naive at that time, thinking that people care about the environment,” he said.

While recalling his sales experience in earlier days, Pachyappa burst out laughing. “Once, more than 5,000 people came to our exhibition; most of them test-ride our electric vehicles. They talked about environmental benefits and said the vehicle is nice, but when it was time to buy, they all disappeared.”

Villagers bought the most

But there are people who did buy. Among them is Bhanumathi Mani, a 52-year-old who sells snacks and drinks to factories in her village at the outskirts of Coimbatore — the industrial town where Pachyappa’s company is located.

Mani says her customers like hot tea, but she couldn’t pedal her bicycle fast enough to deliver it. So she bought an electric bike in 2008. Since then, she can reach 300 customers per day, instead of the previous 50.

As Mani managed to serve more, her income increased. For the first time, she made a profit from her business after selling tea for 20 years. The tea seller also saved enough money for her children’s college education and financed her family to build a new house. “My neighbors all envy me, asking how I can change my life dramatically within five years,” Mani said while offering tea to factory workers on a recent day.

So she pointed them to Pachyappa’s company. One villager bought, then another and another. After the electric two-wheeler maker introduced the Angel, a converted Chinese bicycle that goes only 15 miles an hour but can carry extremely heavy loads, its sales soared to hundreds in a few weeks. The poor and uneducated villagers became the major buyer of the electric vehicle.

“There is no concern about climate change or environmental protection,” Pachyappa spoke of his customers. “Electric vehicles thrive there because it helps boost economic and transportation needs of rural residents.”

In early 2012, Ampere sold about 600 vehicles per month, mainly to farmers and small tradesmen in the countryside. And since fuel prices in India rise day by day, the electric vehicle producer also began hearing buzz from a market that it tried and failed in before.

Urban market begins to emerge

Last year, about 30 percent of Ampere’s revenue came from sales in Indian cities, Pachyappa said. In addition to urban motorcyclists, businesses called, because they want to carry goods and workers in electric cars to save costs.

“The sales of electric vehicles have been growing slowly but steadily,” said Hemalatha Annamalai, Ampere’s founder.

Hero Electric and other leading Indian electric vehicle manufacturers all reported sales growth. According to the Indian Society of Manufacturers of Electric Vehicles (SMEV), annual sales of electric two-wheelers in India more than doubled, increasing from 40,000 units in 2009 to more than 100,000 in 2011.

“The buyer segment for electric two-wheelers is totally driven by economics,” said Sohinder Gill, the head of SMEV and CEO of Hero Electric. As he explained, the expense of an electric two-wheeler for each kilometer driven is only one-third that of a petroleum-powered one, and its sales price is 20 to 25 percent cheaper.

Still, the price of a basic electric scooter starts from $450 — a luxury for the low-income group. Banks in India are hesitant to provide a loan because driving low-speed electric vehicles does not require a driver’s license and vehicle registration, making it hard for the bank to secure the payback or track the vehicle in case of a loan default.

The industry has also been riding on an on-and-off government support toward electric vehicles. In 2012, a program to subsidize EV purchases ended early because of exhausted funds. The government promised a new $4.13 billion stimulus plan instead but failed to start it on time. That led to India’s electric two-wheeler sales falling by half last year, according to Gill.

Challenges, profits and loyalty

The sales of electric two-wheelers in India confront other obstacles, as well. For instance, Tamil Nadu, a southern Indian state of 72 million, ran into months-long electricity blackouts in 2012, leaving many electric vehicle businesses dark and immobile. Pachyappa of Ampere says his company’s monthly sales dropped by 90 percent. “People were saying, ‘Why should I buy an electric bike when there is no electricity?'”

But Pachyappa considered the blackout more of an opportunity. He told his potential customers the electric two-wheeler would operate like a small power station when electricity is gone, because the vehicle battery can charge a highly efficient light-emitting diode as well as a small fan — a welcome appliance in this tropical region.

The company is also developing high-speed electric motorcycles. Although the new model will be more expensive than the existing ones, Pachyappa says it can meet all the requirements banks need to finance the purchase.

Some Indians have already set their minds to stick with electric vehicles even though no financial assistance will be available. One such customer is Mayilchamy, the homoeopathy doctor.

While his main motivation was to end the painful cycling, Mayilchamy says the e-bike has done much more than that. The battery-run vehicle never gets tired, so he can travel more and visit more patients. The e-bike also allows him to carry more herbs, which he sells to pharmacies along the way.

“I used to make an annual profit of 10,000 rupees [$161] with lots of difficulties, but last year, I earned 35,000 rupees [$563] easily through the help of the e-bike,” Mayilchamy said.

As his income increases, so does his purchasing power. While waiting for a factory worker to fix his broken battery charger, Mayilchamy said he is aware that his e-bike battery will age and require a replacement, too.

“But overall, the electric bike is very good,” Mayilchamy said. “I’m ready to buy another one when it is needed.”

Photo by Coco Liu

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