According to a recent ICRA report, the electric segment is likely to account for 14-16% of new three-wheeler sales (excluding rickshaws) by FY2025, up from 8% currently.
27 Mar 2023 | 9674 Views | By Autocar Professional Bureau
Electric three-wheelers, including e-rickshaws are expected to gain traction going forward due to favourable operating economics and the government's focus on cleaner means of transportation, particularly for commercial applications, as per an ICRA report.
According to the report, the electric segment is likely to account for 14-16% of new ...
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Electric three-wheelers, including e-rickshaws are expected to gain traction going forward due to favourable operating economics and the government's focus on cleaner means of transportation, particularly for commercial applications, as per an ICRA report.
According to the report, the electric segment is likely to account for 14-16% of new three-wheeler sales (excluding rickshaws) by FY25, up from 8% currently. Penetration is estimated to rise to 35-40% by FY30 as the product gains more acceptance, and financing-related challenges subside.
According to Kinjal Shah, Vice President & Co Group Head, Corporate Ratings, ICRA, “e3Ws (including e-rickshaws) have been at the forefront of India's electrification journey, being among the early adopters. In 10 months of FY23, 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."
She went on to add that 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. Shah further stated that 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.
Until now, the unorganised e-rickshaw industry has dominated the expansion of the e3W market, accounting for 90% of all e3Ws sold in the country. This segment has thrived over the last five-seven years due to lower upfront expenses and operational savings, as well as minimal compliance requirements.
However, e-autos, which have a larger load-bearing capacity and top speed than e-rickshaws, are also gaining popularity, with sales split evenly between the goods and passenger carrier segments.
The latter has been fuelled in large part by favourable operating economics and a desire by numerous companies, notably e-commerce firms, to employ green vehicles for last-mile transportation needs. The e-auto passenger carrier segment, on the other hand, has had relatively lower levels of EV adoption, although this trend is improving. Since e-rickshaws are also an option for passenger transportation, with lower upfront costs, more seating capacity, and fewer compliance requirements, the adoption of e-auto passenger carriers has been relatively slower.
According to ICRA’s recent channel check, most e3W dealers have seen double-digit growth in sales in the last two years. This is due to a number of factors, including lower operating costs, exemptions from registration and road taxes, and higher demand for last-mile connectivity. However, while demand for e3Ws (including e-rickshaws) is increasing, sales have been limited by a lack of financing options with the loans offered being at high interest rates, poor loan-to-value ratios, and shorter EMI tenures. Furthermore, many large banks and NBFCs are not yet lending to this segment, limiting the buyer's financing alternatives. Almost three-quarters of the dealers polled believed that improving finance availability would be the most effective way to boost e3W sales.
“Overall, the outlook for e3W (including e-rickshaws) remains favourable in the medium to long term,” Shah adds, due to growing demand for electric vehicles as a result of factors such as environmental concerns and higher CNG and diesel prices.
Furthermore, several cities are increasingly limiting the registration, admission, and usage of polluting vehicles, and as a result, e3Ws are expected to gain further popularity. Additionally, lower TCO, as well as the government's push for net zero targets and support from government incentives, are expected to propel e-auto sales in the medium to long term. With incentives under the FAME-II scheme set to expire in a year’s time, there is a likelihood of sales pace gaining further momentum in the upcoming fiscal.”