Centre plans to mandate sales of electric 2- (under 150cc) and 3-wheelers starting April 2023

The government of India’s ambitious electric vehicle programme, which aims to have a large portion of the country’s vehicle parc powered by lithium-ion batteries by 2030, is looking to make an impact and gain traction in the market by focusing on and starting with what are recognised as the low-hanging fruit – two- and three-wheelers.  

It is learnt that in a recent meeting of the Inter-Ministerial Steering Committee of the National Mission for Transformative Mobility and Battery Storage, the high-level panel is looking to mandate sales of only electric three-wheelers from April 1, 2023 and April 1, 2025 for electric two-wheelers (below 150cc).

In addition, the government also plans to double the subsidy for electric three-wheelers from the existing Rs 10,000/KwH to Rs 20,000/KwH, with the focus being on moving from lead-based battery to lithium ion battery (and other advanced battery chemistries). Furthermore, the government also plans to come out with a scrapping policy for vehicles and link it to electric mobility promotion.

The government is also expected to further tighten fuel efficiency norms, standardise ecosystem and introduce higher registration charges for ICE-vehicles. To further promote manufacturing and sales of electric vehicles, the government is also planning to introduce 'Polluter Pays Principle' a fee on ICE vehicles that will be utilised for offering rebates on EVs, charging infrastructure and establishing EV battery manufacturing Giga-factories in the country.

What's interesting to note is that while the government's move may look far too ambitious, the country is already witnessing a silent rise in electric two- and three-wheeler revolution. In FY2019, the sales of EVs in India surpassed the 750,000 unit mark to total 759,600 units for the first time. The sales were primarily driven by electric three- and two-wheelers.

Impact on India's 2W industry
For India's two-wheeler industry, the world's largest motorised two-wheeler market,  the impact of such a mandate could be catastrophic both for the OEMs, component manufacturers as well as allied industries. 

To place this into perspective, a total of 21 million fossil-fueled two-wheelers were sold in India in FY2019. Of this, 18.44 million units or 88 percent constitute models with 150cc or below 150cc engines.  

While the government's intent to address pollution issues is laudable, the execution of such a strong mandate will require considerable handholding for all stakeholders.    

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