Who Will Drive India’s Two and Three-Wheeled EV Segment?

The EV revolution has just begun in the country and companies are gearing up to make the most of the rising opportunities in this segment


India’s electric mobility revolution is just beginning. The electric vehicle (EV) market in India is buoyant amid increasing policy support from the government. The adoption of EVs in the country is poised to grow in the coming years, although battery charging infrastructure remains a valid concern among potential consumers.

The transition from conventional fuel technology (internal combustion engines) to EVs is a global phenomenon. Countries like The Netherlands and Norway have already rolled-out action plans to replace petrol and diesel cars with electric vehicles by 2025.

In India, the central government had asked its think-tank the NITI Aayog to develop a policy which will help promote EVs in the Indian market. The NITI Aayog has put out a proposal stating that after 2025,  only EV two and three-wheelers must be exclusively sold in the country. The think-tank expects a complete transition to EVs by 2030, though it sounds a bit overambitious at this juncture. Recently Union Minister Nitin Gadkari has been quoted in the media implying that the shift to electric vehicles should happen naturally and that the government will continue to EVs without banning petrol or diesel vehicles.  This turnaround is a result of a slowing economy and a prolonged slump in auto sales.

In March 2019, the Union Cabinet approved the proposal to implement a program titled ‘Faster Adoption and Manufacturing of Electric Vehicles’ in India Phase II (FAME India Phase II) aimed towards the promotion of electric mobility in the country. Moreover, the central government has planned an outlay of ₹5 billion (~$70.3 million) for the second phase of its FAME program in a bid to propel EV adoption on a bigger scale. The program was launched in 2015, and it was successful in increasing the share of hybrid and EV passenger vehicles from zero in FY 2012-13 to 1.3% in the FY 2015-16.

The objective of FAME is to encourage faster adoption of electric and hybrid vehicles by way of offering upfront incentives on the purchase of electric vehicles and establishing necessary charging infrastructure for electric vehicles. According to the statement released by the government, the program will help in addressing the issue of environmental pollution and fuel security.

It has been a cause for concern in the government that India relies heavily on oil imports to meet its transportation fuel demands. NITI Aayog estimates that EV sales will save around $60 billion by reducing oil imports based on current consumption trends. The plan to transit to 100% EVs for three-wheelers by 2023 and two-wheelers with an engine capacity less than 150 ccs by 2025 is not only to increase the energy efficiency but is also aimed at reducing oil dependence while fighting back air pollution in the country.

Owing to the high level of air pollution in most of the Indian cities like Delhi, Mumbai, Gurgaon, and Bangalore, the government is focusing on developing the two and three-wheeler market since they are known to be the largest in number and pollute the environment significantly.

According to research conducted by The Energy and Resource Institute (TERI), in the 28% transport sector’s contribution to Delhi’s pollution (winter PM 2.5 concentrations accounting for both primary and secondary contributions), trucks account for 8%, two-wheelers 7%, three-wheelers 5%, and cars amount to 3.4%. PM2.5 refers to the atmospheric particulate matter (PM) that has a diameter of fewer than 2.5 micrometers, about 3% the width of a human hair.

“Due to degrading standards of air quality and growing pollution menace, India needs to readily embrace the EV wave. Our nation houses 13 of the world’s 20 most polluted cities. In addition, India belongs to the group of countries with the highest recorded levels of particulate matter, with our cities recording alarming levels of PM10 and PM 2.5 matter. These figures mark the urgent need for India to embrace electric vehicles, as combustions from motor vehicles are one of the significant sources of air pollution. While the Air Quality Index (AQI) levels are certainly alarming, India is further obligated to reduce the global emissions owing to the Paris Climate Agreement,” said Sugandha Pal, an urban transport planner and a research associate at TERI.

She added that the FAME program for two-wheelers is a massive boost for the industry. Nearly 15-16 Indian firms operate in the two-wheeled electric scooters and bikes segment. “This is bound to move up faster,” she said.

A. Shajahan, the managing director of Kerala Automobiles Limited (KAL) said that in the next three years, the number of EV two-wheelers and three-wheelers would be around 700,000 in the Indian market.

After receiving the clearance certificate from Pune-based Automotive Research Association of India (ARAI), KAL aims to manufacture 8,000 electric autos per year. Earlier, Shajahan had told Mercom that the domestic product would be made in KAL’s factory located at Aralumoodu near Thiruvananthapuram in Kerala. The company which is an undertaking of the Government of Kerala since 1978, manufactures three-wheelers (diesel, petrol, LPG, and CNG) suitable for passengers and carrying goods.

The company targets to manufacture 500 vehicles which will be available in the market by September 2019.

After Maharashtra, Karnataka, Andhra Pradesh, Uttar Pradesh, and Telangana, Kerala with over ten million vehicles on the road, has embraced e-mobility to reduce the impact of pollution from fuel-based vehicles. The state’s transport department has chalked out a roadmap for an electric vehicle policy. It includes bringing one million EVs on the road by 2022 and creating a pilot fleet of 200,000 two-wheelers, 50,000 three-wheelers, 1,000 goods carriers, 3,000 buses and 100 ferry boats by 2020.

Top Companies supplying two and three-wheeler EVs

In June 2019, the Confederation of Indian Industry (CII) called stakeholders from across the transportation and renewable energy sectors for consultation on the future of EVs in India.

The CII has emphasized on a three-step strategy. The first strategy would include setting the right goals based on macros, such as India’s carbon footprint and energy security.

As part of its second strategy, CII urged the government to be technology-agnostic in its approach as the transportation sector is going through significant and transformative innovations both in vehicles and batteries.

According to CII, the third strategy would focus on the affordability of electric vehicles for consumers. Vehicles like two-wheelers and three-wheelers are preferred modes of transport in rural areas and towns where most of India resides.

In August last year, NITI Aayog and the CII entered into a partnership for the sustainable development of India.

Jaipur-based start-up company BattRE has been ideated and incubated with the purpose of achieving sustainable modes of transportation using renewable energy sources. The company specializes in e-scooters and e-cycles.

The founder of BattRE, Nishchal Chaudhary said, “With the government giving the push to EV and technology getting better with every passing day, the industry is fast approaching an inflection point. Given the mandate of NITI Aayog of all less than 150 cc vehicles to be made available only on electric by 2025, the industry size can rise up to $30 billion in the next six years.”

Regarding the growth of the EV vehicles (two and three-wheelers) in the market, he said that currently, the market is still in its nascent stage, with electric two-wheelers contributing to just 0.5 % of the total two-wheeler market but having said that, “the industry is increasing at more than 100% every year. The fiscal year 2019-20 is going to be an important year as many new players are entering the market, improving the technology along with a decisive push from the government and the industry is all set to take off from here”.

Asked about the readiness of the consumers to accept EVs, Chaudhary said, “EVs are not a new concept, they have been in India for more than a decade. However, the battery technology was not appropriate leading to many dissatisfied customers. This did more harm than good to the industry. However, now with better battery technology with long life and easier charging, the perception is changing. Given the huge savings on fuel cost, EVs acceptability will only grow from here.”

He claims that the unique selling point of his product is its battery which has a shelf-life of six years. “In addition, we have priced the scooter at a very affordable price which will be able to take electric mobility to the heart of India,” said Chaudhary.

When asked why some companies despite having the technology and sources, are taking time to consider mass manufacturing of electric two-wheelers and three-wheelers, Chaudhary said, “In my view, moving to EVs will take away all the inherent advantages which large internal combustion engine vehicle manufacturer enjoy today. That can be one of the reasons. Another reason is BS-VI investments that will take some years to recover.”

Bharat Stage (BS) are emission standards set up by the central government to regulate the output of air pollutants from internal combustion engine equipment, including motor vehicles. Introduced in 2000, the BS norms are based on European regulations. In April 2010, BS-VI emission standards were implemented in 13 cities of India.

Rajiv Bajaj, the managing director of Bajaj Auto, had earlier criticized the government’s proposal of making all two-wheelers and three-wheelers to go electric by 2025, saying “it is unrealistic considering a large portion of the country is still without electricity.”

Despite mixed opinions from different companies regarding the markets for two-wheelers and three-wheelers in India and the government’s conviction to replace petrol and diesel vehicles with EVs, many companies are coming forward to take the opportunity. One such company is the Shado Group.

Shado Group, one of the world’s leading provider of Electric Vehicle technology and charging infrastructure from Singapore, recently announced the unveiling of India’s first affordable, low voltage, high-performance instantly chargeable electric three-wheeler called Erick.

Developed by Bangalore-based Adarin Engineering Technologies, Erick is aimed at the Indian commercial market, has a range of 70 kilometers per charge, is capable of operating at high ambient temperatures and exceeds traditional gasoline, CNG and diesel vehicles in performance. The company claims that its ultracapacitor battery is able to charge within a few minutes and Shado Group is the only company in Asia that provides this capability from on-grid fixed charging stations or off-grid mobile solar-powered charging points.

Shado and Adarin merged in 2017. Adarin’s expertise lies in the automotive powertrain and control technology. Shado provides expertise in battery technology—specifically the ultracapacitor batteries.

Considering the government’s plan to invest ₹5,000 million (~$70 million) as “quite positive,” Dr. Saurabh Markandeya, the co-CEO of Shado Group, said, “Ultimately, we need to build out the infrastructure as otherwise consumers simply will not purchase. Charging infrastructure is incredibly disruptive and expensive to develop, especially in India’s large, congested metros. Space is scarce, the streets are narrow, and the laying down of wires and cabling to supply the necessary electricity is very costly. Hence, Shado Group is looking to target the commercial sector first. We have developed electric three-wheelers that can be used for passengers and cargo. We also allow entrepreneurs to develop their own charging points and profit from them. We believe that this will spur the development of the necessary infrastructure that will allow for the mass adoption of electric vehicles.”

The three core unique selling points of the three-wheeler manufactured by Shado is its high power, low voltage motor technology which is safe and cost-effective according to the company. The smart motor controllers and onboard diagnostics enable easy to service and road-side repairs.

The second is the power storage system based on ultracapacitors using Shado’s proprietary ‘capacitor management system.’ The ultracapacitors’ life is more than 50,000 cycles and is 20 times longer than today’s lithium batteries claims the company.

Lastly, the powertrain within Erick, which is powered by ‘electrans’ an indigenously developed electric powertrain consisting of a low voltage motor integrated with differential and a liquid-cooled motor controller delivering extreme torque even at low speeds.

Incumbent versus start-ups

 So, with several start-ups entering the market, will the incumbents like Bajaj and Hero Motors be able to make the transition or will the new start-ups have a shot at making inroads into the market?

“There must be proper synchronization among EV stakeholders. There are various activities to be performed at different stages of planning, implementation, and subsequent operations and maintenance of EVs. There can be numerous business models depending on the possible combinations and may be driven by an individual player or by collaborating with each other. However, the government would need to lay emphasis on business models that will play an important role in achieving financial, economic and operational sustainability,” commented Sugandha Pal from TERI adding, “Characteristics of these business model must include fundamentals of operational excellence, accessibility, safety and regularity, reliability, technologically driven for each vehicle segment pertaining to EVs. Responsibilities of each stakeholder are expected to vary depending upon the role played across different phases for deploying vehicles depending on vehicle category (electric two-wheeler, three-wheeler, cars or buses) and related charging infrastructure. The business models should have a defined mechanism explaining government-driven roles with other players in a specific EV project.”

Although the next three years are crucial for the business, manufacturers are positive about the change and, it is possible that start-ups may have a shot at making inroads.

Markandeya further added, “Ultimately, it is up to the quality of the technology, product and customer support. Currently, the EV three-wheeler market is dominated by Chinese firms who are unable to provide adequate after-sales service, warranty, and support. If an India-based start-up such as us can enter the market with a better product and better support, then we can expect to be successful.”

India in the past has missed the electronics revolution and semi-conductor revolution, therefore, it will be a costly affair for the country if it loses the electric mobility revolution too. Experts opine that if established manufacturers do not take the opportunity, then the start-ups will plunge into the foray like in China.

Meanwhile, Chaudhary said, “In my view, moving to EV will take away all the inherent advantages which large internal combustion engine vehicle manufacturer enjoy today. That can be one of the reasons. Another reason is BS VI investments that will take some years to recover.”

“The EV industry is still at its infancy in India. Investors and entrepreneurs are ready to take the plunge, but the policy support should be generous and steadfast creating an atmosphere conducive to investments, certainty in the market, and long-term visibility. The Union Minister for transport and the NITI Aayog do not seem to be on the page and are making contradictory statements about setting deadlines for transition to EVs, which does not help. The policy should be clear and set in stone for the EV sector to get to the next level,” said Raj Prabhu, CEO of Mercom Capital Group.

Image credit: M. Tawsif Salam [CC BY-SA 3.0]