The penetration of electric vehicles in the three-wheeler segment has crossed 50 per cent in FY23, spurred majorly by electric rickshaws (e-rickshaws).

As one of the early adopters of electric vehicles (EVs) in the country, the three-wheeler segment has reported an EV penetration of 53 per cent in this fiscal, while the penetration of EVs in the two-wheeler and passenger vehicle segments stands at about 5 per cent and 1 per cent, respectively, in FY23, according to the data Vahan Dashboard.

However, the EV penetration in the three-wheeler segment is currently driven by unorganised e-rickshaws. In this fiscal, of the 3.9 lakh electric three-wheelers sold (as on March 26, 2023), e-rickshaws accounted for a little over 90 per cent.

Though electric auto passenger carriers offer better range and top speed and higher load-carrying capabilities, the adoption has been slow. On the other hand, e-rickshaws, which are also available as an alternative for passenger transportation requirements, have seen rapid adoption in the past few years due to affordability, lower maintenance costs and minimal compliance requirements.

Running costs

According to estimates of ICRA, running costs (for fuel) for e-auto and e-rickshaw are ₹0.2-0.4 per km and ₹0.3-0.5 per km respectively, when compared with ₹2.8-3.2 per km for diesel three wheeler and ₹2.5-3 per km for CNG 3W.

“Given the lower upfront costs and operational savings, coupled with minimal compliance needs, this segment has flourished over the past 5-7 years. However, e-autos, with a higher load-bearing capacity and top speed vis-à-vis e-rickshaws, are also gaining prominence now,” says Shamsher Dewan, Senior Group Vice President & Group Head — Corporate Ratings, ICRA Ltd.

Excluding the e-rickshaw segment, the penetration of EVs in the 3W segment is relatively lower at 8 per cent, though it has been picking up over the past two years. This penetration level is projected to increase to 14-16 per cent (excluding rickshaws) by FY25.

In the e-auto segment, the penetration trends have been more favourable in the goods carrier category, driven by favourable operating economics and a push by e-commerce companies and other logistics players towards the use of green vehicles.

Favourable policy

Going forward, multiple factors are to drive faster adoption of e-autos and they include a favourable policy environment with Central and State government subsidies to reduce capital costs, reduction or waiver of registration fees, road taxes and permit requirements.

“These result in a significantly lower (40-45 per cent) total cost of ownership (TCO) as compared to conventional diesel/CNG 3Ws, offering a compelling proposition for shifting to e-autos,” adds Dewan.

Financial availability

A key challenge for the faster adoption of e-autos is financing availability. Financing options for electric three-wheelers are very limited now as banks and financial institutions are shying away from lending to this segment.

“Since over 95 per cent of the vehicles are bought through financing, the government could ensure in providing adequate financing options to these buyers. This will also help the manufacturers to achieve scale. We have come out with 6 years warranty for our E3Ws to give confidence to banks and other lenders. But, this space still faces challenges in getting adequate financing,” says Uday Narang, Founder and Chairman, Omega Seiki Mobility, a manufacturer of electric three-wheelers.

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