Electric three-wheelers rev up for rapid growth in India's EV market

Manufacturers hitch a ride on this fast-growing segment of the EV market, which is leading the electric mobility charge

Encouraged by the rapid growth of the electric three-wheelers, manufacturers of such vehicles are betting big on the segment. Most of them have lined up aggressive expansion plans in capacities and new products. Among other things, the segment, like the e-two-wheelers, has immensely benefited from the government’s policy push, particularly the FAME II subsidy scheme.

The FAME scheme, which stands for Faster Adoption and Manufacturing of Hybrid and Electric vehicles, has made e-three-wheeler pricing more competitive than internal combustion engine (ICE)-powered vehicles. For instance, a Mahindra Treo auto rickshaw costs Rs 2.22 lakh whereas a Bajaj Compact RE costs Rs 2.27 lakh. A recent government tender for 100,000 vehicles worth Rs 3,000 crore has also given manufacturers another reason to be optimistic.

Although much of the att­ention has been focused on e-two-wheelers, it is e-three-wheelers that are leading the electric mobility charge, acco­unting for more than 60 per cent share in the overall electric vehicle (EV) market. By 2030, 70 per cent of all three-wheelers sold in India are ex­pected to be electric, according to Nomura Research Institute. This is higher than the 30 per cent penetration expected for e-two-wheelers and 10 per cent for the commercial e-four-wheelers.

Though on a low base, sales have been advancing at a fast clip. Growth has surpassed pre-pandemic levels thanks to brisk month-on-month exp­an­sion. Passenger carriers, for instance, have doubled to 14,507 units in October 2021 from 7,025 units in the same month a year ago. Cargo variants, too, have shown similar traction, tripling to 1,821 units in October compared to 676 units in the corresponding month last year.

Mahindra Electric Mobility, which leads the e-three-wheeler segment, claims to offer the widest range consisting of the Treo and Alfa vehicles, with Li-ion (lithium and lead acid) options, and has seen robust sales, said Suman Mishra, chief executive, Mahindra Electric.

“Mahindra is the only player in India to have crossed sales of 10,000 Li-ion electric three-wheelers based on the Treo platform. Just last month, we achieved record production numbers for the Treo. In the first half of this year, we have grown our electric business by five times versus the first half of last year, thereby outperforming the electric three-wheeler industry,” said Mishra. On an average, Mahindra has been selling 1,500-2,000 electric three-wheelers in a month.

Mahindra’s e-Alfa Mini

Mishra claimed that e-three-wheelers are practical and when compared with CNG or diesel vehicles, owners can save up to Rs 1.2 lakh annually on fuel costs and an additional Rs 45,000 in maintenance cost. “It is a fantastic economic proposition. With an increasing number of state governments notifying EV-friendly policies, EV adoption has been picking up pace. In the load segment, more than 10 per cent sales are from the electric three-wheelers,” she said.

Nagesh Basavanhalli, group CEO & MD at Greaves Cotton, concurred. “Value-conscious buyers in urban pockets have started understanding the economic benefit of owning an e-three-wheeler. Added to this, the last mile logistics demand, growing urbanisation and satellite towns will spur replacement demand,” he said.

On an annualised basis, the e-auto rickshaw market in the passenger carrier segment has grown from 46,000 units in 2016 to 126,000 units in 2019, according to the Vahan Das­h­board of the Ministry of Road Transport & Highways. For the first eight months of the current fiscal, it has dec­li­ned to 64,000 units over 81,000 units in the corresponding per­iod last year. The dip is largely att­ributable to the Covid-19-indu­ced lockdown.

Even as the segment looks promising, it’s not without challenges. Harshavardhan Sharma, head, auto retail practice at Nomura Research, pointed to limitations such as finance, repair and maintenance, parity with CNG, shift to e-four-wheelers and underdeveloped charging infrastructure that can impede the current pace of growth.

“If CNG catches up faster, EV three-wheelers may not remain attractive. A shift to e-four wheelers and small commercial vehicles such as Tata Ace, Ashok Leyland Dost etc. can also slow the advancement as buyers may go for higher load-carrying EVs,” he said.

Basavanhalli sees huge potential for growth, especially in tier-II and tier-III cities where connectivity is still a challenge and e-three-wheelers are bridging that gap. It is also providing meaningful livelihood opportunities to new and traditional auto-drivers who want to shift to affordable, sustainable and environment-friendly mobility solutions, he added.

Greaves Electric Mobility, he added, has a strong presence in e-three-wheelers and through the recent acquisition of MLR Auto, the company has a wide portfolio of products in the passenger and cargo solutions segment. Currently, it has a capacity to produce 1,000 units per month and there are plans to up this pace.

In addition to Greaves and Mahindra, TVS Motor, Piaggio Vehicles, Kinetic Green and Atul Auto are some of the other prominent players in the e-auto rickshaw market. Most companies have new products and investments lined up over the next few months. Bajaj Auto, the market leader in three-wheelers in the passenger carrier segment, has been conspicuous by its absence so far. Now it, too, is revving up with plans to enter the segment by the first quarter of next fiscal, a company official recently said.