Abid Hussain Barlaskar
Road To Recovery

Can Electric Cycles rival private cars, taxi apps in urban India?

Aditya Munjal, director, Hero Cycles and Lectro E-Mobility speaks about his company’s efforts to build a fresh segment within one of the oldest categories of mobility.

This year’s World Bicycle Day (June 3) also marked the shutdown of Atlas Cycles, which was among the oldest and most popular bicycle brands in India. The company shut its last manufacturing unit in Sahibabad, Uttar Pradesh.

However, around the same time, Hero Cycles, Atlas’ key competitor at one point, launched an ad campaign for its fledgling e-cycles sub-brand, Hero Lectro. The developments are conflicting in nature.

With a huge non-urban population, India has had a healthy appetite for bicycles, making it the second-largest manufacturer, only after China. Over 16 million bicycles were sold in India in 2019.

To put things into perspective, 21.19 million motorcycles and scooters were sold in 2019. The bicycle market is reportedly valued at Rs 5,000 crore to Rs 5,500 crore, and is projected to grow at an eight per cent CAGR.

A regular 'black cycle' for adults
A regular 'black cycle' for adults

Based on price, the market is divided into four segments, i.e., standard, fancy, premium, and super-premium. The prices range from a few thousand rupees to a several lakhs. Based on age groups, the market is largely divided into kids and other variants.

Utility wise, the category is further divided into regular roadsters (‘black cycles’, or city cycles), mountain bikes, sports, hybrid, etc. E-cycles is a rather new phenomenon, and the segment fits between mechanical bicycles and electric vehicles. The regular roadsters make up most of the market, but India’s appetite is changing.

Hero Cycles holds the largest share in the Indian market. It is the leader in both the standard and premium segments, with an overall market share of nearly 43 per cent. The traditional Indian bicycle market used to be dominated by Hero, BSA, Hercules, Avon, and Atlas.

Aditya Munjal, director, Hero Cycles and Lectro E-Mobility Solutions, tells afaqs! that the market, which was once dominated by black cycles, is changing rapidly with the evolving needs of the consumers and an increasing appetite for better products.

Aditya Munjal
Aditya Munjal

“From being a predominantly black cycles market (almost 80 per cent) in the late 1990s to contributing nearly 40 per cent in 2019, the share is being shifted to more fancy bikes, like mountain bikes, bikes for kids, and bikes for girls. Mountain bikes (Rs 5,000 to Rs 10,000) is the belly of the market today, and is the most important segment.”

While rural markets were always bicycle strongholds, Munjal mentions that those living in cities are taking to cycling for reasons ranging from fitness, leisure, and even general commuting. The COVID-19 crisis has resulted in more people taking to cycling to stay fit, as gyms and public exercising are unsafe. The reduced dependency on public transport is also a key reason (for more people taking to cycling).

"The bicycle category sees a major drop out of customers post the 10-16 age bracket as users then migrate to automobiles."

In India, 10-16 year olds are the primary consumers of bicycles. Then, there are cycling enthusiasts and passionate riders. Munjal reveals that the category sees a major drop out of customers post the 10-16 age bracket as users then migrate to automobiles. He plans to arrest the migration and rally customers into the new segment of e-cycles. “The sales of e-cycles are small at the moment, but they are rising sharply year on year.”

After major additions, like shock absorbers and gears, electric motors are the newest bit of innovation in the cycle space. Hero's e-cycles come with a throttle and pedal assist. The battery assists in pedalling, hence reducing effort. There are no regulations for e-cycles since they are a mechanised extension of regular cycles. The riders do not require a license. Claims are, a full charge offers upto 25 kms range and a maximum speed of 25 km/hr.

Hero Lectro now shares the space with major international players, like Trek, Kona, Schwinn, Bianchi, Scott Sports, and Indian e-cycle startups, like Spero and Hulikkal.

E-cycles figure as a critical part of Hero’s global expansion plans. The company entered the category around five years back, and efforts are now being made to establish a foothold in India and Europe. These include setting up a manufacturing plant dedicated for e-cycles in India, setting up of a global design centre in the UK, acquisition of two European brands – Insync and HNF. Hero has set a target: 10 per cent e-cycle production share of the global market by 2024.

Can Electric Cycles rival private cars, taxi apps in urban India?

Munjal mentions that the e-cycle market is growing faster than even the traditional bicycle market in many European countries. Citing industry reports, he adds that over three million e-cycles were sold in Europe in 2019, a 23 per cent jump over year 2018. The share of e-bikes in total bicycle sales was 17 per cent.

In India, e-cycles, in general, start at a premium price range of over Rs 30,000. Hero Lectro’s e-cycles start at around Rs 21,000 for the gearless variants, and goes up to Rs 1.35 lakh. In comparison, a super-premium Bianchi e-cycle could be priced in lakhs.

“Pricing and other marketing propositions depend on several factors, including demand, scale of production, cost reducing innovation, and policy support, in terms of taxes. In many countries, the governments are offering incentives as well as infrastructural support to encourage use of traditional cycles and e-cycles. With a little policy help from the government, such as tax concessions and subsidy support, the sector can grow significantly,” Munjal says.

The lack of adequate charging infrastructure remains a major deterrent for e-vehicles, be it e-cars, or e-motorbikes. Munjal mentions that Lectro, despite being an EV, is not affected by the issue.

“First, it doesn’t need dedicated charging points. Second, being a pedal assist e-cycle, it allows a combination of electric biking and pedalling, and it relieves consumers of the ‘range anxiety’ problem. If one loses battery charge, he/she can always pedal back easy with gear shifts, unlike an e-car/e-bike.”

He stresses that as e-cycles are categorised under EVs for tax benefits, the government should also recognise them as e-vehicles under its FAME II scheme (Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicles).

“The subsidy under FAME will imply lower MRPs for consumers. A cycle safe road infrastructure is another critical element for success of cycling initiatives in India – both traditional and electric.”

Munjal lists awareness, mass affordability, consumer behaviour, and the lack of cycling infrastructure as the actual challenges for the brand in India. The issues are being addressed via a combination of communication, advocacy and cost saving efforts.

“Our advertising and marketing strategy is focused on educating consumers about the health and environmental benefits of e-cycles, along with the fact that unlike e-cars or e-motorbikes, e-cycles do away with the issue of range anxiety and the cost associated with ownership. Since e-cycles are still a premium product, given their pricing, our target consumer is anyone who is conscious about both the environment and fitness.”

The brand’s new #MoveAtYourWill campaign positions its e-cycle as an alternative to public transport - in light of the COVID-19 crisis - as people look for options beyond public transport, including buses, metros, taxis and auto-rickshaws. “Here, our marketing strategy focuses on attracting consumers who need personal transport, but can’t afford or don’t want to buy cars and yet want move at their will,” says Munjal.

Hero Lectro sells across 500-plus retailers across India, as well as e-commerce platforms, like Amazon, Flipkart and Choosemybicycle. While the young brand continues onboarding new dealers, a lot of effort is going into building a robust after-sales network. While dealers are being trained to become self-sustaining service centres (much like the auto sector), trained technicians are being placed at key dealer points to assure both the consumer and the dealers of the brand’s support.

Teams at Lectro are also focusing on creating a connected ecosystem and user communities with the launch of the Hero Lectro iSmart app. It helps connect with the customers directly, and also provide relevant content and tools.