Navigant Research Blog

New OEM Products and Investment Boost Light EV Market

— August 1, 2017

Various light EV (LEV) technologies are emerging to address the congestion, poor air quality, and lack of mobility options negatively affecting transportation markets around the world. LEVs include low speed EVs—also referred to as neighborhood EVs—and electric-powered two-wheel vehicles such as electric motorcycles (e-motorcycles) and electric scooters (e-scooters). These vehicles offer the ability to improve personal mobility while simultaneously reducing pollution from the transportation sector, which are attributes desired by government authorities and citizens alike. In contrast to private cars, LEVs occupy less physical space, contributing less to traffic congestion and providing more flexibility in where they can travel and be parked. Additionally, these vehicles are generally more affordable and have lower capability requirements than full-sized EVs. Due to these advantages, electricity is more competitive with light vehicles compared to the full-sized vehicle market.

Significant OEM Announcements

Leading automotive OEMs, such as BMW and Mahindra, are recognizing the opportunities in the LEV market, and both companies made industry headlines in July. BMW Motorrad released its X2City e-scooter, designed for a variety of urban mobility applications. The kick e-scooter has a foldable steering unit (for easy storage) and a top speed of 25 km/h (15.5 mph) and an electric range of 25 km-35 km (15-22 miles). Rather than distributing the X2City through the BMW Motorrad dealer network, the e-scooter will be sold in bike shops and online by the end of 2017. It is expected to retail for about €2,500 ($2,950).

Indian conglomerate Mahindra Group announced that it will double its investment in the United States, adding another $1 billion in funding. The Mahindra GenZe e-bike and e-scooter brands are key to Mahindra’s North American strategy, which is disruptive to traditional transportation technologies. GenZe recently announced a partnership with the on-demand delivery company Postmates. It will be supplying LEVs in the company’s New York and San Francisco operations and will expand to supply more delivery vehicles to Postmates’ network of 200 cities over the next year.

Market Opportunities

Increasing urbanization and government policies are pushing consumers in heavily populated cities to move away from full-sized cars for motorized transportation, creating opportunities for LEVs. Navigant Research expects the market for LEVs to expand significantly over the next 10 years. According to Navigant Research’s Light Electric Vehicles report, revenue generated by global LEV unit sales is expected to more than double over the next 10 years—growing from a $9.3 billion market in 2017 to $23.9 billion by 2026.

The market will be driven by continued declines in technology costs, advances in technology capabilities, and positive national and local regulatory policies. Unlike other large EVs, the purchase price of LEVs in most markets is closer to their internal combustion engine equivalent. LEVs also have lower licensing and crash test requirements compared to other vehicles, easing adoption for businesses to produce them and for consumers to purchase them. While the market for LEVs is improving, several obstacles still need to be overcome. These obstacles include low retail gasoline prices, relatively high purchase costs, and technology limitations.

 

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