Electric 3-wheelers will not need subsidies beyond FY26, says Anish Shah

The electric three-wheeler industry will not have to depend on government subsidies beyond the financial year 2026, as it will have reached a level of scale of self-sufficiency, Anish Shah, President, Federation of Indian Chambers of Commerce and Industry said.

"The subsidy has come down as increased volume and scale has driven down costs. The subsidy will continue until the end of FY26. Beyond FY26, it will not be required, because we will reach the level of scale where the industry can fund themselves," Shah said, who is also the group CEO and Managing Director of Mahindra Group.

Shah's comments come as the two-year Rs 10,900-core PM E-DRIVE scheme started with a lower subsidy per vehicle compared to FAME II, and the subsidies will be halved in the second year.

Currently, electric two-wheelers, three-wheelers, buses, trucks and ambulances are eligible for demand incentives from the PM E-Drive scheme. 

Electric rickshaws currently get a subsidy of Rs 5,000 per kWh with a cap of Rs 25,000 per vehicle while passenger and cargo electric autos receive a subsidy of Rs 5,000 per kWh with a cap of Rs 50,000 per vehicle. The subsidies will be halved from April 2025.

Autocar Professional had earlier reported that the government is likely to phase out demand incentives on purchasing electric two-wheelers and three-wheelers from the financial year 2027. 

Senior government officials are of the opinion that only those segments that have not reached 10% electric vehicle penetration will require demand incentives from 2026.

Meanwhile, the government has achieved the annual target set for incentivizing 80,546 electric three-wheelers under the PM E-Drive scheme this year. According to the Ministry of Heavy Industries website, 79,974 electric three-wheelers sales were reported by OEMs till November 7 under the scheme. 

“The vehicles sold and registered beyond the targeted number of 80,546 will not be eligible for incentive in FY 24-25,” the website says. It is unclear whether consumers will continue to be eligible to receive the incentive on electric three-wheeler purchases made in the current fiscal year or if they will have to wait until the next year to avail subsidies.

Earlier, Minister of Road Transport and Highways Nitin Gadkari had also said that he feels electric vehicles don’t need subsidies, as the number of vehicles is going to increase, and the cost of these vehicles is going to reduce.

Currently, electric vehicle adoption in India is at its nascent stage with overall penetration close to 7%. Two-wheelers accounted for 56% of the electric vehicle sales in the last financial year, while three-wheelers constituted 38%. Affordability and limited charging infrastructure have been major hurdles in the faster adoption of electric vehicles.