With companies rushing to invest in electric mobility, the electric three-wheeler penetration will be between 14-16 per cent by FY25 in India from 8 per cent now, an ICRA report said.  

According to the rating agency, the penetration is estimated to rise to 35-40 per cent by FY30 as the product gains more acceptance, and financing-related challenges subside.

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“e3Ws (including e-rickshaws) have been at the forefront of India’s electrification journey, being among the early adopters. While sales dropped substantially in the aftermath of Covid-19, they rebounded at a healthy rate in FY23, surpassing pre-Covid levels by a solid margin. 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. Coupled with the inherently lower running costs, this results in a much lower (40-45 per cent) total cost of ownership (TCO) than conventional diesel or CNG 3Ws, making the conversion to e-autos an attractive proposition,” said Kinjal Shah, Vice President & Co Group Head, Corporate Ratings, ICRA Limited. 

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Electric three-wheeler dealers have seen double-digit growth in sales in the last two years, according to ICRA. This is due to lower operating costs, exemptions from registration and road taxes, and higher demand for last-mile connectivity.

While the demand for e3Ws is increasing, sales have been limited by limited financing options, with loans being offered at high-interest rates, poor loan-to-value ratios, and shorter EMI tenures.

Mahindra & Mahindra, which has the largest market share in electric three-wheelers, recently announced a ₹600 crore investment by the International Finance Corporation (IFC) for scaling up of manufacturing of electric three-wheelers. The investment will be in a new last mile mobility (LMM) company set up by Mahindra & Mahindra. 

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