Let’s say you are a startup designing an electric scooter or motorcycle for the Indian market. We are sure there are about a hundred of you out there. The most important question when the designers and engineers hit the drawing board is: What am I designing for? What will my benchmark be? Sure, the popular way is to pit the highest-selling scooters and motorcycles against each other. That has been the most popular strategy in the ICE scooter segment, where every 110 cc scooter is benchmarked against the Honda Activa.
However, the Indian market is huge: last year it closed at more than 22 million units. But more than the sheer width of the market, it is the variety that is now apparent. InsightEV just released a comprehensive forecast for the Indian two-wheeler market. In the forecast, we segment the market into more than 30 broad segments based on the price, body style, engine capacity, market positioning, and multiple other factors. The beauty of a market that is 22 million units is that even the smallest niches have enough meat on them, and a startup can visualize itself as being the leader in only one of those 30 sub-segments.
The TAM Trap
Back to the original question: If you are a startup designing a product for the Indian two-wheeler market, what should you be making? What should be the specs, the dimensions, the motor sizes, etc? The common mistake startups make is falling into the TAM trap. TAM is the Theoretical Total Addressable Market. In India, it stands at 22 million units. If you are a TAM believer, that’s the number of units that can be sold, as the size of the entire two-wheeler market in India was 22 million units last year.
But TAM never works. It’s a startup metric that looks good on a slide deck. It used to convince investors. Not anymore. In the end, it contributes little to business planning.
The ICE Benchmarking
Benchmarking exercises in entry-level ICE are simpler. The characteristics of an engine mated to what the market loves mean that operators have a very narrow band to operate in. Any engine is like a jelly. You pinch too much power, and the mileage gets punched in the face. You design it to be high-revving, and the low-end torque dips. That is especially true for small capacity mass market engines like a 110 cc scooter engine or the 100 cc commuter motorcycle engine. This helps new players. The customer in these entry-level segments remained constant; so did the products. We call it stagnation.
Never mind. That did make the job of new entrants easier, especially at the planning stage.
Electric is different. We started looking at the most popular electric scooters in India, and the Ather Rizta is quite different from the TVS iQube. Again, both of them are quite different from the Bajaj Chetak. Now the Rizta makes 4.3 kW peak from a mid-drive motor. The i-Qube makes about the same (4.4 kW) but from a hub motor. This Chetak has about the same (4.2 kW) as well, but has a geared e-drive unit.
All three are popular. All three look radically different. The Rizta looks bloated, trading looks for practicality, and is constrained by a platform that did not start from scratch. The Chetak is all looks, has a sleek metal body that does a good job of hiding rather pedestrian specs. Meanwhile, the iQube is predictable and bland, and that makes it the most popular of the three.
For the new entrant, this is as confusing as it can get. Who do I benchmark against?
Benchmark Against ICE
I think we get it wrong when we start benchmarking electric against electric. The first job of the electric is to get ICE out of the market. It’s a rather simple “Us vs Them” story, and the benchmarking should be against them.
That should not be a problem for the TAM crowd. Just look at where the core mass of the ICE market is and get to the drawing board, aiming squarely at the core. The problem is that the core is dynamic. There is a shifting mass that seems to be upwardly mobile every year. So we at InsightEV created a measurement metric – the Weighted Mean Engine Displacement Index (W-MEDI). As the name suggests, it is the weighted mean of the engine displacement of all two-wheelers sold in the market that year. The absolute number indicates where the market is. In isolation, it means little. Draw it over a two-decade horizon, and it tells you a story of shifting customer preferences, changing priorities, and a paradigm shift in the economics of the country.
Draw it over a five-year horizon, it tells you where the market would be headed, and where the market would be headed.
That’s important for a vehicle designer. Remember the much-used adage “Run to where the puck would be.” Vehicle designers are designing for the future, and if the W-MEDI is shifting, you do better by looking at where it would be in 3-5 years and then design accordingly. After all, the W-MEDI represents the core mass, the centre of gravity of the entire market, and allows you to maximise your shot at the TAM.
Indian W-MEDI: What it tells us
In a country where a large chunk of sales comes from 100cc motorcycles, one would expect the Indian W-MEDI to be close to that number. On the other hand, in a year when a 350cc+ leisure motorcycle manufacturer manages to move a million units, you know that the W-MEDI is not going to be anywhere close to 100.
For the InsightEV Two-Wheeler Market Forecast, we plotted the W-MEDI from 2009 onwards to 2025. Then, as we built the forecast, the W-MEDI was extended to 2030. It is hardly surprising that the W-MEDI has an increasing trend. Over the time horizon, the Indian per capita GDP (PPP) has multiplied, and it would be a good idea to look at the above chart against this below actual slide taken from the forecast, which plots the GDP/capita (PPP).
As incomes improve, it is but natural that the expectations of even the customers at the base of the pyramid would get aspirational. They start looking for more power, more features, better comfort, and greater highway-ability from the motorcycle. Power and engine sizes would increase, and while the engine capacity is not a dynamic entity, customers keep moving the W-MEDI upwards by increasingly choosing higher capacity machines.
Normally, this (increase in engine size) hurts fuel efficiency, traditionally, one of the strongest drivers of vehicle sales in the market. However, we have noticed that over the last five years, fuel efficiency has been a secondary driver of sales. Indian pump prices, after facing a steep incline pre-2021, have stagnated and even come down. Between 2021 and 2026, pump prices actually declined by nearly 15%. In fact, so strong has been the fuel price stability in recent years that it is no longer an economic or political issue.
For whatever reason, the Indian pump prices have remained unchanged even as ships started blowing up in the Straits of Hormuz.
What that means is that the WMedia is likely to continue on its ascending track even over the next five years. And that is a cue. If you are an electric scooter/motorcycle designer, be generous with those motor specs, will you?
