As the adoption of electric vehicles gains momentum in India, electric two-wheelers have been among the first adopters but the three-wheeler segment too is fast catching up backed by strong growth from the e-commerce players.
The electric three-wheeler segment recorded 101 percent YoY sales, amounting to 1,77,874 total sold units in fiscal 2022, recording a significant growth. State-owned Convergence Energy Services has tied up with fintech firm 'Three Wheels United' (TWU) for the procurement of 70,000 electric three-wheelers in Delhi and Bangalore over five years
The key reason for the growth in electric three-wheeler space can be attributed to the lower total cost of ownership of an electric three-wheeler at 50-60 paisa per km while the running cost of a diesel van is about Rs 3.5 – 4 per km. Many large corporations have hopped onto the EV three-wheeler bandwagon due to their mandates towards cutting down the costs on the one hand, and reducing the carbon footprint, on the other.
Suman Mishra, the CEO, of Mahindra Electric Mobility, one of the leaders in this space, says that the FAME-II subsidy extension, PLI scheme, state government incentives, and increased availability of financing have helped create conducive conditions for an increase in sales of electric 3-wheelers. " Also, the growth of the battery swapping infrastructure and increased range of offered by newer players is pushing higher adoption of e-commerce and last-mile delivery players for e-commerce. The proactive and EV-friendly policies of various states like Haryana, Chhattisgarh, and Punjab that have been recently announced along with existing policies of various states have helped the growth of the sector.”
By 2025, according to ICRA, over 30 percent of three-wheelers sold will be battery-powered. Also, the government's move to reduce GST to 5 percent has created a favourable environment for existing manufacturers to boost their capex plans with Greaves, Wardwizad, Omega Seiki Mobility, and Piaggio who are all looking to add capacities to meet growing demand.
Another key factor that will aid the growth of three-wheelers are existing players eyeing the manufacturing of EV batteries and powertrain technologies, and the setting up of charging and battery swapping infrastructure is going to help incentivize the local EV ecosystem.