Sales of e3Ws, for the first time in India's automobile market history, have surpassed the sales of internal combustion engine-powered three-wheelers. Data sourced from Vahan Portal and the Federation of Automobile Dealers Association (FADA) of India points out that against 18,187 ICE three-wheelers sold in May 2022, a total of 23,321 electric three-wheelers sold in the same month.
The e3W segment was able to occupy more than 56% share of the total three-wheelers market in India in May 2022. Vinkesh Gulati, President, FADA, on the Indian auto industry achieving the feat, noted that there is a long way to go for the EV industry, but he is glad that things have started to take place in the electric vehicle industry. He pointed out the economies of scale as the critical aspect for the EV industry to drive adoption.
Gulati said, 'The economy of scale is very important in the commercial sector, so the benefit of better acquisition price and cheap running cost is pushing the 3W segment towards EV. Also in the commercial segment, there are a lot of Government controls in permits which are supported.'
NITI Aayog, in 2021, had proposed that only e3W should be allowed to be sold in India starting 31 March 2023. It is also rumoured that the Government's upcoming battery swap policy will also aim to help increase the adoption of e2W and e3W in India.
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e3Ws Hold Largest Share
Compared to e2Ws, electric passenger cars and bigger electric vehicles, the e3Ws hold a larger share of the market in comparison to their ICE counterparts. On the other hand, the two-wheeler segment, the largest auto selling vertical in India, comprised only 3.2% share of EV in its overall sales figures for May 2022. As against 1,222,994 total units of two-wheelers sold in India in May 2022, only 39,490 E2Ws were sold in the country during the same month.
The e3W segment also seems bigger in value than the e2W segment, as the e3W is priced much higher than an e2W. For instance, there are e2W models priced below INR 100,000, but the majority of branded e3Ws are available in the country at starting prices upwards of INR 145,000. The battery sizes used also make the e3W higher in value as these use bigger, hence expensive batteries.
Atul Chandel, Director, Autobei Consulting, noted, 'Currently, EVs are viable only if the running km of the vehicle is more than a certain distance like an average of 100km per day. Another reason is the Government subsidy is available only for commercial vehicles. The conditions at the moment seem favourable only for commercial usage of the vehicle.'
A close look at the numbers from FY22 also reveals that the e3W segment has been posting growth. The segment had posted 101.24% growth YoY in FY22, selling 1,77,874 e3Ws. However, only 88,391 E3Ws were sold in FY21 and 140,684 in FY20. The overall 3W segment, in FY 2022, had seen sales of 388,093 units. These figures in FY21 were 258,172 units.
Sectors Contributing Growth
While the segregation between the EVs, commercial and private, is very clear, it is critical to understand that just a few sectors drive the growth of commercial electric three-wheelers in the country. It is more important to note that passenger commute via commercial EVs is just a tiny part of the same as most e3Ws and commercial e2Ws are deployed in the logistics and goods transportation sector.
Zyngo EV Mobility, a logistics startup Mobility Outlook spoke to recently, has already deployed 700 commercial EVs (200 two-wheelers + 500 three-wheelers) in Delhi NCR alone. The startup is now expanding in other Indian cities and is targeting to add 18,000 EVs to its fleet (majority e3Ws). On the other hand, ChargeUp, a battery swap and charging infrastructure company, is so bullish about the growth of commercial EVs, especially three and two-wheelers, that it only allows these two segments to assess its 120 battery swap stations in Delhi NCR.
|YoY E3W Sales in India|
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Honda entering the EV business in India by offering swappable batteries to e3W OEMs is another big example of what the industry experts deem of the commercial electric vehicles market in the country. The company is not charging a single penny from OEMs who are using its batteries. It instead charges end-consumers in accordance with every battery swap they do, using Honda's platform.
Sandeep Kumar Sansanwal, Associate Vice President, Honda Power Pack Energy India, had earlier told Mobility Outlook, 'Three-wheelers in India define the last-mile connectivity. Even if you look at the travel patterns of 3Ws you will find out that they travel from a certain point to another certain point.'
E-commerce and grocery delivery, as per Chandel, are the biggest segments driving the growth of commercial e3Ws in India. Using electric three-wheelers for deliveries, as per him, help save the likes of Amazon, Flipkart, and others to save money. 'Margins on groceries are super thin and the only way to save them is using economical modes of transport,' he highlighted.
Can PVs Replicate e3Ws' Success?
The sales of passenger cars stood at 2,726,047 units in FY22. Only 17,802 (less than 0.5% of total PV sales) out of these were electric. However, in May 2021, the electric PVs contributed a 1.1% share to the overall sales of PVs in the country. A total of 2,638 electric PVs were sold in India against a total of 263,152 PVs.
Gulati and Chandel believe that automobile OEMs need to launch more EPV and give options for consumers to choose from. The OEMs also need to ensure that EPVs are available to experience and buy in all parts of the country. FADA data points out that only one-tenth of the total dealers can showcase and offer EVs to customers in India.
'OEMs should come out with more options and work on easy availability all across India. As of today only 10% of dealers in India are able to offer EVs to their customers. We need all OEMs to launch EVs and make it available all across,' noted Gulati.
Chandel argued that the automobile OEMs also need to work on making EVs more economical as the ones available in the Indian market today are out of reach of the mass segment. It is also worth adding here that many EPVs available in the INR 15 lakh to INR 25 lakh segment do not offer real-world ranges of over 250 kms which, as per Chandel, is a big turnoff for consumers. 'Range anxiety should be of utmost importance to OEMs,' he highlighted.
The four-wheeler commercial EVs, as per Gulati, may also not be able to taste the same success as the commercial e3Ws and e2Ws. This is because the four-wheeler electric commercial vehicles will need bigger batteries adding Capex both for the OEM and the end-consumer. As against 652,125 CVs sold in FY22 in India, only 2,203 ECVs were sold in the same financial year.
'The battery needed to keep the loaded truck running for a long time - would be very costly and heavy. It may shift towards Hydrogen. It is difficult to comment on M&HCV at the moment,' concluded Gulati.