EV penetration in the L5 category was around 23% last year.
21 Aug 2025 | 17054 Views | By Kiran Murali
TVS Motor Company anticipates robust demand for electric three-wheelers going forward on the back of growing urban mobility needs and lower total cost of ownership, and projects that electric vehicles to account for 60% of three-wheeler sales [in the L5 category only] by the end of this decade. The optimistic ...
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TVS Motor Company anticipates robust demand for electric three-wheelers going forward on the back of growing urban mobility needs and lower total cost of ownership, and projects that electric vehicles to account for 60% of three-wheeler sales [in the L5 category only] by the end of this decade. The optimistic outlook coincides with the company's entry into the electric three-wheeler cargo space on Thursday, marking a strategic move to capitalize on the anticipated growth.
“The overall market will continue to grow. We expect 60% of the market to be electric vehicles by 2030. The passenger three-wheeler market is growing faster. For cargo, a lot of it depends on the logistics. There is growing demand for last-mile cargo requirements, and there are a lot of hub and spoke models being talked about," TVS Motor's business head for commercial mobility Rajat Gupta told reporters on Thursday.
In the financial year 2025, around 1.6 lakh electric L5 three-wheelers have been sold while total three-wheelers, including electric and ICE, are estimated to be around 7.2 lakh units with the passenger segment contributing over 80%. The electric vehicle penetration stood at around 23%. The penetration for the passenger and cargo categories remains at a similar level.
Electric three-wheelers have become an important part of urban mobility, particularly in tier-2 and tier-3 cities, where they provide affordable, efficient, and eco-friendly last-mile connectivity. Today, India is the world’s largest market for electric three-wheelers [including L3] and this segment is witnessing the fastest adoption of electric vehicles in the country.
Mahindra Last Mile Mobility and Bajaj Auto dominated the electric L5 three-wheeler market, respectively. TVS Motor made its debut in this space with an electric passenger three-wheeler - King EV Max - in January. Piaggio Vehicles, Murugappa Group’s Montara, Omega Seiki, Atul Auto and Euler are the other major players in this segment.
Demand incentive given by the government through the PM E-Drive scheme (previously EMPS, FAME) has been crucial in driving the electric three-wheeler sales in India. The government also has a production-linked incentive scheme, which provides subsidies for companies manufacturing electric vehicles. Electric three-wheeler models made by companies including TVS Motor, Mahindra and Bajaj Auto are eligible for government incentives under both PM E-Drive and PLI.
The government has been gradually reducing the quantum of demand incentive over the period and is expected to stop it by the end of this financial year. Currently, electric three-wheelers get a subsidy of Rs 2,500 per kWh with a cap of Rs 25,000 per vehicle. While the total cost of ownership for electric vehicles is lower in the long run, the initial upfront cost has been a major deterrent for customers. Government subsidies have played an important role in bridging this gap by making the initial acquisition more affordable.
When asked if the market is ready to grow independently of government subsidies, Gupta expressed confidence that companies will be prepared to "drive themselves" once the support ends. “The market at present depends on subsidies. We will have to wait and watch, it is very difficult to comment as of now. A lot of people even initial acquisition cost after the subsidy is more. When the subsidy is phased out, everyone will be geared up for that,” he added.
Meanwhile, traditional OEMs are looking to capitalize on the demand in the L3 market. The L3 category refers to low-speed electric three-wheelers, often called e-rickshaws or e-carts, that are designed for carrying passengers or goods, respectively. These vehicles are characterized by their lower speed limits and motor power compared to the higher-speed L5.
The L3 market continues to be populated by a plethora of smaller local and unorganised players. Among legacy OEMs, Mahindra has entered this market, while Bajaj Auto is expected to launch its first L3 model in this quarter. Last-mile connectivity for daily commuters and office-goers, especially from metro stations in urban India, is being fulfilled by such vehicles. Demand for electric rickshaws is strongest in North India, particularly in Uttar Pradesh and Delhi.
Including the L3 category, a total of 7 lakh electric three-wheelers were estimated to have been registered in the financial year 2025, representing a penetration of over 50%.