By 2024, nearly half of new 3-wheelers sold will be e-autos: Crisil

By 2024, as much as 43-48 per cent of new three-wheelers (excluding e-rickshaws), and 12-17 per cent of new two-wheelers sold in India will be electric vehicles (EVs), a study by Crisil Research shows.

E-rickshaws are electric-battery-powered three-wheeled four-seaters with low speed (limited to 25 kmph), while e-autos are three-wheeled three-seaters capable of higher speed (typical maximum speed of ~60 kmph).

However, the traction for four-wheelers will be low as they are likely to account for only five per cent of new EV sales, the study said.

“In the context, supply will also be a critical factor for adoption. The top five electric two-wheeler manufacturers are expected to increase their capacity for electric variants from 0.4 million units in fiscal 2020 to over 3 million units by fiscal 2024. And in three-wheelers, even incumbent original equipment manufacturers are launching e-autos at a rapid pace. But low-speed, four-seater e-rickshaws are fast emerging as an alternative to e-autos by virtue of being ~30 per cent cheaper,” said Hetal Gandhi, Director, Crisil Research.

Advantage cab aggregators

Sales of personal electric cars will remain in the slow lane due to high acquisition and ownership costs, in the absence of demand incentives, it said. Cab aggregators, though, will step on the accelerator as these will enjoy better operational economics and subsidies, it added.

“A cab aggregator’s e-car that runs ~50,000 km a year, for instance, can save about ₹1.65 lakh a year compared with ₹35,000 for a personal e-car that runs ~10,000 km a year,” said the study.

As for the commercial vehicles space, subsidies to state transport undertakings will drive sales of electric buses for intra-city operations, it said. However, poor public charging infrastructure will impact adoption, it added.

The study looked at demand, supply and policy growth drivers for EVs such as battery costs, government subsidy and charging infrastructure, apart from conducting a segment-wise analysis of the cost of acquisition and operation of EVs compared with existing internal combustion engine (ICE) vehicles.

The faster adoption of two-wheelers and three-wheelers is a function of cost, the study found. Typically, electric scooters are cheaper to run compared with ICE scooters, and e-autos are cheaper to both own and run compared with their ICE counterparts, it explained.

The government has given a policy push for EVs with the second instalment of the Faster Adoption and Manufacturing of Electric Vehicles in India policy (FAME II) and numerous efficiency and emission regulations, Pushan Sharma, Associate Director, Crisil Research, pointed out. “However, India has much catching up to do in terms of the four drivers of growth globally – battery price, demand incentives, supply push and charging infrastructure. That means policy implementation will be crucial for faster adoption of EVs in India,” said Sharma.

Crisil Research expects the landed cost of lithium ion battery – a key driver of EV adoption in India – to come down in line with an expected drop in global prices by fiscal 2024.

“Execution of the government’s phased manufacturing programme for EV batteries, too, will help drive down battery prices. Till then, EV adoption will be gradual, giving auto component manufacturers enough time to realign their operations,” said Crisil.

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