Falling EV Sales: What Ola, Okinawa & Other EV Cos Should Do To Regain Customer Trust

The e-scooter fire incidents coupled with a spate of battery-related fires and the global supply chain crisis for electric vehicle (EV) batteries have dented the domestic two-wheeler EV industry badly. The electric scooter registrations witnessed a sharp decline of around 20 per cent from April to May this year, according to media reports derived from VAHAN data from the Ministry of Road Transport and Highways. The trend of this decline in May has been observed across companies such as Ola, Okinawa Autotech, Pure EV, Jitendra EV, and Ampere Vehicles.  

“While 2W EV sales were growing rapidly though on a low base, various fire incidents across almost all EV brands has created a fear in the mind of the customer,” FADA said in its May (2022) Vehicle Retail Data report.  

“This coupled with supply chain issues has decreased 2W EV sales drastically from last month,” it added.  

Many industry experts also opine that the decline is a reflection of the initial pent up demand in the domestic market for such vehicles, exhibited by huge bookings.   
 
Did fire incidents lead to two-wheeler EV sales decline?  
 
There could be an apparent connection between the EV two-wheeler sales dip and the scooter fire incidents. Several companies in this segment that have witnessed the downturn in their vehicle registrations are associated with the incidents that occurred in the last few months.  
 
This has also pushed the government to revisit its stance on policies around EVs in the country.  
 
But the big question is that have recent EV fire incidents cost the industry its momentum?  

Puneet Gupta, Director – Automotive, S&P Mobility opines that such incidents impact the mindset of customers and would discourage them to own electric vehicles.   
 
“If such incidents are not controlled early it will become a big challenge to overcome later. However, we should not forget that the only solution to rising pollution and to reduce the import of fuel is to electrify transportation. Also at present, we are seeing that consumers are aspirational and want to associate themselves with a cleaner, Greener and sustainable mobility. They also want new experiences and generally are ready to take more risk,” states Gupta.  
 
Harshvardhan Sharma, Head - Auto Retail Practice at Nomura Consulting states that there was a 27 per cent month-on-month decline in EV 2W sales in May at 28,935 units, compared to April wherein 39,281 units were sold, which shows the dampened customer sentiment after the fire incidents.   
 
“Customers do realise the inherent risk and it’s amplified across media sources as well however their fears aren’t unfounded given the recent series of incidents and recalls,” says Sharma.  
 
What are the reasons for such fires?  
 
Weak thermal management, Poor battery packs and module assembly and usage of low quality cells are the primary reasons for fire, Gupta reckons, adding that extreme Climates, poor Testing conditions, and rough handling of electric vehicles can also be the other reasons for the fire.  
 
“The prime reason for EVs catching fire is thermal runaway. The conception of high temperature causing battery packs to explode is flawed. While high temperatures do have a bearing on battery performance, health and life parameters, they do not lead to any explosions,” says Nitish Arora, lead, Natural Resources Defense Council.  
 
Sharma enunciates that a lot of things have to go right for a battery to perform well including the quality of cells and their packing configuration.

Additionally, the design of the battery also plays a major role. One must be able to optimise the energy and heat functions and “keep enough factor of safety” to prevent any overrides of energy at the cost of thermal management and lastly the regulatory compliance requirements.   

“We see far lower cases of fires in 4W EVS because of very stringent homologation and testing requirements by competent authorities,” adds Sharma.  

Did EV companies compromise on quality in a bid to dominate the budding electric vehicle space?  

In a bid to dominate the budding EV space before legacy players entered the race, the startups dealing with EVs decided to put their best wheels forward, as fast as they could.  

Sharma states that the estimated two-wheeler EV volumes in India are likely to touch close to 18 million units annually by 2030, which is a 25 times jump from the current industry size. This has surely attracted interest across the value chain from a wide variety of players including startups, but he opines that “it’s a little unfair to put a pin on startups for vehicle quality.”  

“Start-ups have done what OEMs couldn’t do for decades. Of course, there will be issues but this can be addressed by developing a better ecosystem and regulation to support and nurture start-ups. OEMs can collaborate with start-ups for a win-win case as the skills between OEMs and startups are complementary in nature,” opines Sharma.  

Meanwhile, Gupta states that since the EV industry is at a nascent stage and is experiencing explosive growth, there is an obvious pressure on it to deliver, and the bigger challenge is to develop new technology vehicles which are safer and reliable too.   

He adds that most of these products are being made by the startups which need more experience and have to learn the art of manufacturing from traditional players.  

“Traditional OEMs over the years have been delivering consistent quality vehicles and following the standard process. The new OEMs have to follow them too as they enter into mass manufacturing otherwise it will be difficult to control such incidents,” remarks Gupta.  

He further adds that the recent EV fire incidents may hamper the speed but it is inevitable to stop electrification in India.  

“New OEMs have to make sure that such incidents are not repeated and are captured during the early stages of quality inspections. Target should be to build the right quality at the first time,” states Gupta.  
  
Will it be easy for EV industry to recover from this challenge? 

Stressing on improving the battery quality, Gupta emphasises that safety is an important pillar for the auto industry.   

“There is a lot of scope for improvement as the industry becomes more organised. India is already an export hub for components and cars so we should not worry too much or have doubt on our industry capability,” he says.  

To avoid instances of thermal runaway, original equipment manufacturers (OEMs) need to get the right cell quality, robust battery management system, built-in thermal cooling systems and tailor battery pack design to suit Indian road conditions, says Arora.  
 
Meanwhile, Sharma states that human lives are very precious and it should never be a trade-off between market share and Safety.

Bengaluru-based Ather Energy says that batteries should be designed particularly for the harsh and demanding Indian conditions, as the cells that are used in EV batteries are designed for countries with colder climates and OEMs should also invest enough time and effort in on-road testing before they commence commercial production.  

“A well designed battery is the most critical aspect of an electric vehicle from the perspective of safety. Battery catching fire is essentially a question of quality, engineering and manufacturing gaps. It is important that OEMs invest in understanding the market and engineering and make in India for India. Foreign products are designed for a different kind of climatic conditions and usage compared to India.” enunciates Ravneet Singh Phokela, Chief Business Officer, Ather Energy.  

What steps can govt take to address this issue?  
  
The government can look at stringent homologation and testing requirements in addition to increased accountability from EV makers, Sharma opines.  

He further adds that the government may also look at the mandatory focus on engineering and local R&D instead of import route and co-investment in battery development as well as safety testing projects in an OEM consortium.  

Meanwhile, Gupta enunciates that the government has to enforce the testing standards, already in place, so that the companies follow the best in class benchmarks, adding that the dispensation must also encourage companies to recall vehicles if any defect is identified post sales.  
   
He also highlights the need to stop the mushrooming of fly operators and develop players who can deliver quality and experience to the customers.