Why Is APAC Witnessing High Demand for Electric Three-Wheelers?

The government of India approved the phase II of the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME India) scheme in 2019, for a period of three years. The scheme was launched on April 1, 2019 with an outlay of INR 10,000 crore. Around 86% of this fund has been allocated for demand incentives, to generate demand for various types of electric vehicles (EVs). Phase II aspires to create a demand for around 5 lakh electric three-wheelers by 2022.

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Apart from the implementation of such favorable government policies, the low ownership cost of battery-powered electric three-wheelers as compared to their gasoline-driven variants will help the APAC electric three-wheeler market progress at a CAGR of 4.1% during 2018–2023. According to P&S Intelligence, the market was valued at $9,774.5 million in 2017, and it will generate $11,935.1 million revenue by 2023. The low operational cost of these automobiles is owing to the presence of fewer moving parts than their diesel and gasoline counterparts.

Apart from government support, the cost-effectiveness of electric three-wheelers over their diesel/gasoline counterparts is also driving theAPAC electric three-wheeler market. Due to the overexploitation of crude oil reserves, diesel and gasoline are becoming dearer. Moreover, electricity costs lesser than these fossil fuels and CNG, which reduces the operational expenditure for vehicle owners. This also allows transport companies/individual three-wheeler owners to offer rides at lower rates compared to those with a fleet of conventional three-wheelers.

Of the two types of electric three-wheelers — passenger carriers and load carriers — passenger carriers have found the deeper penetration in the region. Due to the large middle- and lower-class populations in the region, which demand cost-effective transportation, the number of e-rickshaws in operation has swollen in the last five years. As per a report published in the Economic Times in September 2019, from 0.4 million in 2019, the number of e-rickshaws (electric three-wheeler passenger carriers) will reach 1 million in India by 2025. A year ago, the Indian daily had said that in 2018, India’s e-rickshaw fleet size was larger than the total Chinese electric cars sold since 2011!

In the coming years, the demand for load carriers is expected to rise faster, on account of the growth in the country’s e-commerce industry. Small-scale logistics service providers cannot afford trucks or mini-trucks, which is why they find three-wheeled load carriers the best option for transporting goods. For medium-haul transportation, such as between two towns in the same district, using four-wheelers, even if electric, can be an operational and financial burden, which is why three-wheelers are being adopted more.

Both these types of automobiles are powered by a lithium-ion (Li-ion) or sealed lead–acid (SLA) battery. While electric three-wheelers with SLA batteries enjoy a larger customer base presently, the demand for those with Li-ion batteries is rising rapidly now. Li-ion batteries are more efficient than SLA variants, in terms of driving range and energy density, therefore, also lighter. Moreover, extensive R&D is resulting in a quick reduction in Li-ion battery prices, which is making electric three-wheelers cheaper.

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Therefore, with the conscience regarding air pollution stirring in the region, governments are making efforts to decarbonize their transportation system, by encouraging the adoption of EVs, including three-wheelers.

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This release was published on openPR.