India E-Rickshaw Market Research Report: Forecast (2023-2028)

Market Definition

E-rickshaw is an electric vehicle pulled by an electric motor and powered by a battery. The popularity of the vehicle is growing in the country on account of the low fuel cost, low maintenance cost, no noise pollution, and eco-friendly features. In addition, the vehicle is capable of providing an energy-efficient transport system due to low emissions.

Market Insights & Analysis: India E-Rickshaw Market (2023-28)

India E-Rickshaw Market is projected to grow at a CAGR of around 15% during the forecast period, i.e., 2023-28. The growth of the market was minimized due to the sudden dip in demand for public transportation owing to lockdowns & curfews during the pandemic. However, the automotive industry spotted a massive surge in demand for electric rickshaws in post-pandemic, aided by government policies, incentives, environmental concerns, and the availability of cost-friendly models suitable for commuting.

Further, a usual battery three-wheeler consumes the regular form of electricity to charge its batteries. However, in, solar power variant, the batteries can be charged on the accelerating mechanism in the vehicle motors on a sunny day. In addition, these vehicles generate higher functional and energy efficiency, which can raise their mileage by 10% to 15% approximately with a lifecycle of 10 years. Such features are carving a robust niche for these vehicles in the market for transportation utilities. 

Market Dynamics

Key Drivers: Reasonable Prices Paired with the Constant Endorsement of Electric Vehicles by the Government

The beginning cost of an electric-rickshaw is INR0.6-1.1 lakhs, whereas the cost of ICE-based autorickshaw is INR1.5-3 lakhs, which is considered the major socio-economic benefit. Besides, the running and maintenance cost for such electric three-vehicle is lower per kilometer compared to ICE-based counterparts, thereby providing more employment opportunities to cycle-rickshaw drivers.

Further, the numerous state electric vehicle regulatory frameworks and policies like National Urban Livelihood Mission 2013, Pradhan Mantri Mudra Yojna, Smart City Mission 2015, and Faster Adaptation of Manufacturing of Electric Vehicles (FAME I and II) provide continual measures in the forms of loans and direct subsidies and environmental policies. These initiatives are directly influencing the growth of the industry by pushing the adoption of such vehicles further in the coming years.

Possible Restraint: Horizontal Manufacturing Structure of E-Rickshaw Industry in India

One of the prime challenges for manufacturers is finding quality motors and controllers at economical prices; thus, most manufacturers use subpar drive train parts, both imported and domestic, to reduce production costs. Along the same lines, assemblers do not spend money on lightweight, durable chassis or high-quality composite materials for the vehicle body. Further, carrying more passengers than the legal maximum of four is widespread. This shortens the vehicle's lifespan by two to three years by impacting both the motor and the battery, whether lead-acid or Li-ion, impeding the market expansion further.

Likewise, the replacement cost of batteries is around INR 25,000-28,000, which makes an E-rickshaw owner turn to the supplier for the return. Moreover, in India, more than 300 respective producers or assemblers compete for this niche market by offering identical cars at different pricing points. They struggle with both the lending institutions' resistance and a consumer group with low disposable income, presenting a challenge for the market participants.

Growth Opportunity: Partnering with Component Suppliers During the Design Phase and Creating Components from Scratch

Almost all of the e-rickshaws released so far share the same characteristics, designs, and functionality. Apparently, product design has not been a priority for manufacturers. However, even though their product may initially cost more, the producers with longer vehicle lives will be able to stand out from the competition. The scale will cause the unit prices to decrease over time. These types of vehicles will also boost lending institutions' confidence.

Thus, the alternative strategy involves turning assemblers/manufacturers into design and development firms solely focused on the design and development of the vehicle, including the chassis, body, and other components. Experienced contract manufacturers would then handle the vehicle's engineering, supply chain management, assembly, and manufacturing. Adopting these strategies might aid market growth and present remunerative opportunities for new entrants and existing investors as well.

Key Trend: Emergence of E-Rickshaw as Eco-friendly & Last-mile Connectivity Alternative

The electric autos or three wheelers aid in alleviating air and noise pollution, and along with this, a significant amount of CO2 emissions can be mitigated daily by transitioning natural gas auto into e-rickshaws. According to the research on vehicular pollution published by the Energy and Resources Institute (TERI) in April 2018, the fleet of auto rickshaws operating in Bengaluru emits about 1200 tonnes of carbon dioxide per day, 4 tons of NOx, and 0.5 tons of PM10, totaling 0.44 million tonnes of carbon dioxide annually due to the auto-rickshaw industry. However, carbon emissions can be decreased by 0.11 million tonnes per year, PM10 emissions by 114.5 million tonnes annually, and NOx emissions by 37.6 million tonnes annually by switching to electric autos.

Moreover, another factor that has encouraged the adoption of electric rickshaws is the ability of such vehicles to emerge as unique and integrated door-to-door systems in order to promote public transport and aid in public initiatives. For instance, Samadhan Abhiyan by Greenpeace India offered door-to-door delivery using E-rickshaws for families of Covid-19 positive patients who are compelled to quarantine themselves and lactating moms. Thus, the aforementioned factors generate extensive growth opportunities for market players in India.

Market Segmentation

Based on Type,

• Passenger Carrier
• Load Carrier

The passenger carrier segment is predicted to generate higher revenue during the anticipated time frame.  Due to rapid urbanization, the number of passenger carriers is expanding on the country’s roads driving the demand for last-mile transportation and cost-effective solutions. Furthermore, the massive investments by manufacturers in cost-benefit convenient E-rickshaws over cycle rickshaws, design and development, and end-user accessibility are speculated to benefit and raise the market during the forecasted period.

Based on Battery,

• Lead-Acid
• Lithium-Ion

Between the two, Lithium-ion batteries are gradually gaining market share because of their superior performance. They have a lower weight of about 35kg due to their high energy density, increasing the overall mileage. Besides, they take 1.5 to 3 hours to charge fully. Moreover, with a lifespan of 1500 cycles (NMC) and 3000 cycles, these batteries are reliable, durable, and efficient for smooth rides. Above all, there is minimal to no maintenance needed for these batteries, making manufacturers switch to lithium-ion batteries.

Another factor contributing to the inflated share of the li-ion battery during the forecast period is their accessibility in the standard industry sizes, 50-60% lighter weight, and 25-50% higher storage. In addition, the self-discharge rate makes them prolong their charge state with the built-in overcharge benefits mechanism. Therefore, the rising popularity of e-rickshaws for transportation and logistics and the batteries used in these vehicles is driving the segment’s growth.

Regional Projection

Geographically, the Regional Market expands across:

• North
• South
• West
• East
• North East

The North India Region is expected to project a higher market share by 2028, aided by improving government initiatives such as subsidies for purchasing an E-rickshaw. These include Electric Vehicle Policy 2018 and Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME India) policies. Besides, Uttar Pradesh gauged a higher share of the market in 2022 due to the steering demand in Tier-1 and Tier-2 cities and rural-urban connects. Therefore, with the increasing focus on accelerating the utility of electric vehicles, electric autos are already gaining traction in the north region.

Regulatory Landscape in the Indian E-Rickshaw Market

• In February 2022, the Government of India launched an incentive scheme under its new battery swap scheme for electric vehicles.  It is initially intended for battery swap services for electric scooter motorcycles and three-wheeled auto-rickshaws.

• Various states in India have formulated electric vehicle policies that provide tax incentives to raise the adoption of electric three-wheelers. For example, Tamil Nadu’s EV policy cuts 100% road tax exemption till 2022 and a relaxation of permit fees. Eight other states have also released their EV policies to shoot up the acceleration of electric three-wheelers.

Recent Developments in the Indian E-Rickshaw Industry

• In December 2021, Mahindra Electric introduced a new passenger carrier three-wheeler, the Treo EV in the Indian market. It is capable of generating 42Nm of peak torque powering the Mahindra Treo EV of Kw.

• In September 2020, Hero Electric and EV Motors India allied to provide advanced battery solutions and charging configurations for electric vehicles in India. This tie-up aimed at enhancing two-wheeler and three-wheeler electric vehicles.

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