How to get an electric scooter dealership?

The electric scooter segment of the Indian electric vehicle has been seeing a steady growth in the last decade. The years between 2014 to 2019 saw a sale of over 152,000 units of electric scooters, with a year on rise of 20.6 percent from the year 2014.

According to the predictions and industry forecasts, by the end of 2025, the retail sales volume of electric scooters will be more than 11,000,000 units, with a CAGR of 57.9 percent.

In financial terms, this means that by 2025, the retail sales of electric scooters are going to cross USD 1 billion with a CAGR of 63.9 percent. So if you are thinking about getting an electric scooter dealership, there is no better time than the present.

The largest electric scooter market in India presently is the state of Uttar Pradesh, with Karnataka in second place. However, as per the industry forecasts, and because of the current market, this demography will quickly change in the next five years.

According to market predictions and the current trends, in the next five years, the states of Tamil Nadu, Maharashtra, Delhi, West Bengal, Rajasthan, Haryana, Gujarat, and Madhya Pradesh will be the front runners for electric scooters alongside Uttar Pradesh and Karnataka.

The growing popularity of electric scooters in the country and the forecast of a promising and lucrative future make investing in the electric scooter market a very viable option.

How to get an electric scooter dealership
How to get an electric scooter dealership

This article will look at electric scooter dealerships in India and how you can go about getting one.

Capital Investment for an Electric Scooter Dealership in India

The initial investment amount and the working capital required for obtaining an electric scooter dealership in India differ from one company to another.

For instance, for the Ather electric scooter dealership, you are looking at an investment between INR 1 crore to INR 2 crores.

For an Ola dealership, the total investment amount is INR 80 to 90 lakhs.

Hero dealership will require a starting capital of INR 40 to 50 lakhs, and for

Okinawa electric scooter dealership, the initial investment cost is the same as for a Hero dealership.

So your investment capital will depend on the company you want to apply for a dealership. However, apart from the investment and the working capital, most other required criteria for all companies are the same across the board.

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Basic criteria for Electric Scooter Dealership in India

The following are the basic requirements for procuring an electric scooter dealership.

  • You should be 21 years of age or over.
  • Your minimum education qualification should be graduation.
  • Experience in dealing with dealerships and relevant goods and services.
  • For godown, you will need a minimum of 500 square feet of space.
  • For your showroom, you will require a space of 1000 square feet and another separate space of 500 to 1000 square feet for the service center.
  • Lastly, you will need to have the ability and expertise to manage and supervise your electric scooter dealership.

The space for the godown, the showroom, and the service center should be on the ground floor with a minimum frontage of 20 feet.

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Documentation and Licensing Papers

Before applying for an electric scooter dealership, it is always wise to have the required documents and licensing papers in order.

Below is the list of documents you will need when applying for the dealership.

  • Copy of Memorandum or Articles of Association if applicable.
  • A letter of deployment of your working capital.
  • Your personal documents will include your Voter ID, Aadhar Card, and your Pan Card.
  • Your contact information – email address, phone numbers, and residential address.
  • Documents showing your income tax returns in the last two to three years.
  • Documentation of your showroom, godown, and service center space. This is proof of ownership or rental agreement.
  • References to your prior experience in the business, if applicable.
  • Your Udhyam registration papers.
  • Your EPF (Employee Provident Fund) ESIC (Employees State Registration Corporation) registration papers.
  • License and registration papers for your establishment.
  • Your GST (Goods and Services) Tax registration and certificate.
  • Papers documenting your electricity permission for a transformer (if applicable)

Having this documentation – license and registration papers in order will help in processing your application for an electric scooter dealership smoothly and in less time.

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Commission on Sales and other Incomes

The commission on the sale of electric scooters and accessories differs from dealership to dealership.

For instance, if you are looking at the Ather Electric Scooter dealership for the sale of a new electric scooter, your net commission will be 10 percent to 12 percent. On accessories, the net commission is 30 percent on the MRP.

In the case of Hero Electric Scooter dealership, your net commission will be 5 percent to 8 percent for the sale of each electric scooter. And on Hero accessories, the net commission is 30 to 40 percent on the MRP.

For Okinawa Electric Scooter Dealership, the net commission per electric scooter is 10 percent to 12 percent, with a 25 percent commission on the MRP.

Applying for an Electric Scooter Dealership

The application process for obtaining an electric scooter dealership in India is a standardized process across all-electric vehicle companies.

There may be some differences here and there, but the overall application procedure for all dealerships involves the following steps.

  • First, you will have to visit the website of the company and look for the dealership or dealer’s enquiry page.
  • Once you are on the page, you will need to fill in the required details.
  • Upon completion, you can submit the form by selecting the submit option.
  • You will receive a ‘thank you message upon the successful submission of the application form. This way, you will know if the submission form went through or not.
  • The successful submission of this application form also means that you are now registered with the company’s dealership for a given year.
  • After successfully submitting the dealership application form, generally, it takes one to two weeks for the companies to get back to you.

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Why is now the best time to invest in electric scooter dealerships?

According to Auto News, published in the Economic Times on April 4th, 2022, the two-wheelers segment of electric vehicles has seen a rise of 423 percent in sales up until now.

Furthermore, in another report published by CRISIL Research, the electric vehicle industry will continue to grow with an approximate market penetration of 12 percent for two-wheelers in the next three years up until 2025.

The other key trends and government initiatives that are driving the electric scooter market include –

Government subsidies and regulatory policies

The National Electric Mobility Plan 2013 to 2020 has played a pivotal role in driving the growth of electric vehicles in India. This plan not only encouraged the adoption of electric vehicles but, more importantly, there was an allocation of INR 17 billion towards Research and Development in the field of electric vehicles.

In addition, to bridge the gap between electric vehicles on the road and the charging stations (which is around 17,000 at the moment), the Indian government has announced 69,000 petrol pumps across the country.

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Decrease in the price of Lithium-ion batteries

The Lithium-ion battery is not just the heart of an electric vehicle, but it is also the most expensive part. The steep cost of electric vehicles is mainly due to these Lithium-ion batteries.

Moreover, when combined with 18 percent GST, their import cost makes the batteries even more expensive. Presently, in the global market, the cost of Lithium-ion batteries is around USD 260/kWh.

However, the good news is that the price is expected to fall to about USD 145/kWh in the next five years.

As a result, in the next few years, the price of electric scooters will come down and may even be in the same price range as that of petrol scooters.

Challenges faced by the Electric Vehicle Industry in India

Though there are some years left before electric vehicles become mainstream in India, the future of electric vehicles in the country does look very promising.

Nevertheless, the country needs to overcome a few major infrastructural challenges to realize the full potential of the electric vehicle market in India.

  • One of the major infrastructural challenges is the disproportionate ratio of electric vehicles on the road and the number of operational electric charging stations in India.
  • The next major challenge is the lack of grid infrastructure and renewable energy sources. Most of the country’s electricity is produced by burning coal. So without a viable and stable renewable source of energy, more use of electric vehicles will mean the burning of more coal.
  • The high cost of Lithium-ion batteries.

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The two-wheel segment of the electric vehicle industry is a growing market, and there is no denying the fact that the future of the automobile industry is going to be electric. So if you are thinking about getting an eclectic scooter dealership, there will never be a better time than the present.