Electric Three-Wheelers Spearheading India’s EV Ambitions

Nitin Kapoor Aug 17, 2022

With India eyeing towards a sustainable economic growth and an ambitious target of electrifying 30 per cent of all vehicles on the road by 2030, the electric three-wheeler segment has witnessed a significant surge over the past three years. While the growth of the electric three-wheelers has been 20 per cent in the financial year 2020, it surged to 34 per cent in FY 2021 and 46 per cent in FY 2022. The government’s roadmap to reach its 2030 electric vehicle targets majorly eyes the inclusion of 80 per cent electric three-wheelers in general transportation.

Most experts believe that India’s transition to clean and green mobility can be spearheaded mostly by electric three-wheelers rather than two or four-wheelers. Though the growth of the electric two-wheelers went up multifold in the past few months, there has been a slowdown in the sales during April and May this year due to shortage of chip storage and negative customer sentiments due to reports on EVs catching fire. However, during this period the electric three-wheeler segment has evolved to be more resolute.

While the sale of electric vehicles has almost doubled in the past few months, in June 2022, the sale of electric three-wheelers has reached 26,900 units from just 6, 100 units same time last year – more than 4 times increase in MOM basis. Furthermore, in June, electric three-wheelers surpassed more than 50 per cent of total three-wheelers sales and the total percentage of three-wheelers sold among EVs in the same month was at a staggering 58 per cent. Industry experts project that by 2025, 9 out of 10 three-wheelers on the Indian road will be electric and with the cells being domestically manufactured by then, the prices are likely to come down too.

The steady growth of the three-wheelers industry can also be attributed to the rapid growth of the e-commerce sector and industry players mandating a shift to EVs for their logistic needs. Electric three-wheelers have been preferred as freight loaders to garbage disposal vans for saving running costs, mostly because, unlike four-wheelers, three-wheelers are more feasible and offer easy options like replacing discharged batteries with charged ones; thereby saving time.

The increased penetration of the electric three-wheelers has also been catapulted by the central and state governments who have been making several policy changes to encourage and promote the EV sector. The Production Linked Incentive (PLI) scheme, has approved Rs 18,100 crore manufacturing of advanced chemistry cell (ACC) battery and Rs 26,058 crore for automotive manufacturing focusing on EVs and hydrogen fuel cell vehicles. Several states have also made policy revisions to offer additional demand, supply, and charging infrastructure.

However, financing in the electric three-wheeler segment still remains a key challenge to be addressed by banks and non-banking financing companies (NBFCs). The public sector banks and other financial institutions have been strategising ways to step up their EV financing to facilitate the micro and small entrepreneurs in the sector. The EV sector, along with the help of the government, is working on chalking out innovative strategies to mobilize capital for the EV transition while also boosting the confidence of financial institutions to invest in end-to-end users.