The electric vehicle market in India has been on the rise for the past few years. This increase was also triggered by increase in usage of commercial vehicles as a result of lower maintenance costs. A latest report by Indian banking firm ICRA states that electric-three wheeler sales are projected to grow from 8 per cent to almost 14-16 per cent by FY2025. The factors that will play a role in this will include favourable operating economics and the government's focus on cleaner means of transportation, particularly for commercial applications.
Kinjal Shah, Vice President & Co Group Head, Corporate Ratings, ICRA Limited, said “e3Ws (including e-rickshaws) have been at the forefront of India's electrification journey, being among the early adopters. In 10M FY2023, the 3Ws (excluding rickshaws) recorded an electric penetration of 8%, compared to 4% for two-wheelers and 1% for passenger vehicles. While sales dropped substantially in the aftermath of the pandemic, they rebounded at a healthy rate in the current fiscal year, surpassing pre-pandemic levels by a solid margin. A favourable regulatory environment with central and state government subsidies to lower capital costs, as well as reduction or waiver of registration fees, road taxes, and permit requirements, continues to be supportive of e-auto adoption. Coupled with the inherently lower running costs, this results in a much lower (40-45%) total cost of ownership (TCO) than conventional diesel or CNG 3Ws, making the conversion to e-autos an attractive proposition.”
The report also stated that electric autos are gaining traction in the country. Until recently, electric rickshaws had accounted for almost 90 per cent of all electric three-wheelers sold in the country. But that looks to be slowly changing as certain Indian buyers have started to prefer e-autos over e-rickshaws as a result of their larger load-bearing capacity and top speed. However, this switch will most likely happen very slowly as e-rickshaws still have the upper hand in terms of lower upfront costs, more seating capacity, and fewer compliance requirements.
Indian electric three wheeler dealers have seen double-digit growth in sales in the last two years even though the financing options seem to be limited and have high interest rates, poor loan-to-value ratios, and shorter EMI tenures. Many large banks and NBFCs don’t lend to this segment which limits the buyer’s financial options. However, financing options for electric three wheelers are stated to rise in the coming years.
