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India has been making headlines for past 2 years about the mass-shift to e-mobility, across two-wheeler and passenger vehicle segments but without much success. On the other hand, a segment of auto manufacturing has silently adopted e-mobility like no other and is showing no signs of slowing down, i.e. electric three-wheeler market in India or e-rickshaw as it is widely called.
India being a developing country, where annual per capita income was just ~$1,800 in 2018, three-wheelers are an important mode of transportation for millions of Indians. Very often, they are associated with high pollution in northern and Eastern India where single-cylinder gasoline/diesel autos are prevalent due to non-existent CNG/LPG infrastructure.
Electric three wheelers started starts gaining popularity post 2012. They have now become a viable alternative for pedal powered and gas engine powered rickshaws. The biggest reason behind growth of electric three-wheeler in India is not regulation/incentives but the low running cost (70-80% savings as compared to gas powered three-wheeler) for driver as well as passenger.
The buyer/driver of electric three-wheeler is expected to recover his investment in 8-9 months and the rider gets an affordable ride at Rs 10 (~$0.15) per ride. Not to mention, the added benefits of non-polluting first mile/last mile/short trip transportation, which is becoming a menace in tier-2 cities
During 2012-2013 when the market was in early stages of development, 100% of electric three-wheelers were powered by Lead Acid batteries but now there is a definite shift towards Li-ion batteries.
The transportation industry has been in a terrible shape as public transportation ran at limited capacity and trains are yet to resume to pre pandemic levels.
Due to Covid, a lock down was imposed across the country which stopped the electric- rickshaw usage. As per regulations, social distancing was enforced which decreased number of passengers per ride. Similar to other industries, there were major losses among the electric three wheeler sellers as well as electric three wheeler drivers as movement was decreased overall.
Since a lot of tourist destinations utilise cycle rickshaw and electric rickshaws and tourism saw a downfall across the country, there was a major loss among the users. Delhi government offered a 1 type relief of Rs 5,000 to e rickshaw drivers to help them combat losses incurred
The electric three-wheeler market in India is estimated at ~$150 Million in 2019 and has the potential to go past $1 Billion by 2025.
Source- Dealers and company websites
Given the history of low R&D spending by Indian auto component manufacturers, there exists a huge gap in demand and supply for critical components like battery, motor controller, regen braking etc.
The domestic supplier base of gasoline/CNG/LPG powered three- wheelers is strong and mature but they are still coming to terms with emission shift to BS VI(comparable to Euro VI). Thus, very limited investment has been made on e-mobility so far. Majority of Indian Electric two and three wheelers companies are relying on Bosch for e-powertrain development.
The market leaders of conventional 3-wheelers (Bajaj and TVS with cumulative 80% market share) are still developing their products and that is where the biggest opportunity lies for component suppliers.
The market size of electric three- wheelers in India has already outgrown gasoline/CNG/LPG by 20% in FY 2019. But it wont stop there as many pedal rickshaw drivers, which are abundant in northern and eastern India(densely populated cities with narrow lanes) will shift to Electric three wheelers further augmenting the market size.
The boom in electric three-wheeler market in India has resulted in many small scale, regional players entering the market. Among the major reasons for this is the substitution of complicated Internal combustion engine with e-powertrain, resulting in greater simplification of three-wheeler manufacturing.
Delhi has a largely unorganized electric 3 wheeler market as the suppliers for electric 3 wheelers are all across town with assembly of parts and tie ups with fabricators to provide the body. The specs are similar across brands but there are more than 10 local brands for electric three wheelers alone. Most of the suppliers in Delhi only assemble kits received from China and other regional manufacturers. Domestic brands will try to gather and organize this market similar to the regular 3 wheeler market.
The bigger players are still developing their products with superior technology and will launch them prior to April 2020 BS VI timeline.
For Electric three wheelers to do well in India, the distribution has to better than the existing market leaders. The dealers for electric three wheelers are so far concentrated in Northern and Eastern India and have almost negligible presence in the west and south.
For comparison, Bajaj (market leader of three wheelers with 50% market share) has 2,200 dealers across India. About 45% are spread across comparatively wealthier and Industrialized west and south India.
