Yamaha Motor India is adopting a cautious approach towards aggressive expansion in the domestic electric two-wheeler market, citing heavy dependency on imported battery cells, compressed profit margins, and supply chain constraints, Hajime Aota, Executive Officer, Yamaha Motor Co Ltd said on Thursday.
Speaking to reporters on the sidelines of global launch of ‘Made in India’ YZF-R2 here, Aota, who is also CMD of Yamaha Motor India Group, said the absence of a fully localised supply chain for lithium-ion cells remains a primary hurdle for global manufacturers entering the mainstream EV segment.
“Still, the cells and raw materials are coming from outside India. Until domestic cell manufacturing and an integrated supply chain are established, cost optimisation and supply reliability will remain major challenges,” Aota said.
He pointed out that the battery requirements of electric two-wheelers are roughly one-tenth the capacity of passenger cars, making it difficult to justify dedicated local battery cell manufacturing purely on two-wheeler demand.
Highlighting the impact on profitability, Aota noted that the shift from internal combustion engines (ICE) to electric powertrains fundamentally alters the manufacturing value chain.
“In conventional motorcycles, we manufacture the engines in-house, which generates core manufacturing value and profitability. In electric vehicles, purchasing cells and motors from external vendors reduces the automaker’s role largely to assembly, putting margins under severe pressure,” he explained.
Aota also distinguished Yamaha’s market position as a wholly owned subsidiary from listed domestic rivals, noting that capital allocation must balance global shareholder expectations of profitability rather than chasing short-term volume market share at the expense of financial returns.
On consumer adoption trends, Yamaha’s market studies indicate that electric scooter purchases in India are predominantly pragmatic, family-driven decisions meant for secondary household use, contrasting with Yamaha’s core focus on individual, performance-oriented mobility.
Despite these near-term headwinds, Aota affirmed that Yamaha is actively evaluating its pricing strategy and studying alternative powertrain architectures. The company has invested in a French electric mobility firm to explore clutch-based regenerative braking systems aimed at enhancing efficiency without compromising motorcycle dynamics and handling.
Aota also outlined the two-wheeler major’s outlook across manufacturing benchmarking, regulatory compliance, sales targets, and potential capital structure options.
Yamaha expects total sales and production across domestic and export markets to surpass 1.1 million units in the current calendar year, representing around 10 per cent year-on-year growth over approximately 1.0 million units clocked last year, he added.
“Volume-wise, the second half of the year will be bigger than the first half due to the festive season. However, raw material price increases, especially aluminum, continue to put pressure on profitability. It is a balancing act between adjusting prices and absorbing input costs,” Aota said.
Commenting on domestic market dynamics, Aota clarified that Yamaha’s overall market share of around 3 per cent does not reflect its core competitiveness, as the company consciously steers clear of the entry-level commuter segment.
“The entire motorcycle industry market share number is not the primary benchmark for us. We do not participate in the 100110 cc commuter space; our focus is entirely on the premium segment,” he said.
Discussing regulatory frameworks, Aota voiced conditional support for India’s ethanol blending programme to reduce crude oil imports, while urging policymakers to ensure long-term regulatory stability.
“We are happy to support the E20 transition. However, if the policy shifts rapidly every two years from E20 to E30, manufacturers must re-engineer engines from scratch. A stable, multi-year timeline allows us to optimise engine development cycles and amortise investments effectively,” he said, adding that technologies like Exhaust Gas Recirculation (EGR) under upcoming CAFE norms present significant cost-absorption hurdles for small-displacement two-wheelers.
On manufacturing quality, Aota noted that Yamaha is actively benchmarking its Indian operations against Indonesia — the group’s other primary global production pillar.
“Looking at future market growth, India is the highest-growth market and one of the largest. While we expand capacity here, on quality and technical optimisation, our objective is to bring Indian manufacturing on par with our Indonesian operations,” he said.
Yamaha’s Indian R&D division has scaled to approximately 280 personnel, supported by an ongoing engineering exchange programme that stations Indian engineers at Japan headquarters for one to two years to bridge technical and manufacturing processes, he added.
When asked whether Yamaha Motor India would consider listing on domestic stock exchanges to mirror local competitors and access public capital, Aota acknowledged that the option has been examined at the group level.
“Have I evaluated that option? Yes, I have. There are pros and cons to being a locally listed entity versus operating as a wholly owned subsidiary responsible to global shareholders,” Aota said, declining to elaborate on definitive timelines.