India’s Electric Revolution: Leading the Global Three-Wheeler Market

by Chitrika Grover - 20 June, 2024, 12:00 211 Views 0 Comment

Globally, long-term EV growth is expected to lower battery prices and advance next-generation battery technology, enhancing the economic viability of electric vehicles. According to a BNEF report, the three-wheeled vehicle segment is on track to reach net zero emissions by mid-century, with India’s growth positioning it as a global leader.

Electric vehicle sales are expected to exceed 90% globally by 2040, with three-wheeled vehicle sales continuing to rise, especially in emerging economies.[1] A Bloomberg report showed that electric vehicles are no longer only a phenomenon in wealthy countries.[2] Countries like Thailand, India, and Brazil are experiencing record sales of low-cost electric models. Which means that, electric vehicle adoption would not be restricted to countries like China.

In 2024, India saw a significant increase in three-wheeler electric vehicle sales, surpassing China as the largest market. The International Energy Agency (IEA) reported that one in five three-wheelers sold globally in 2023 was electric, with nearly 60% of these sales in India.[3] The three-wheeler market grew by 13% in 2023, reaching 4.5 million in sales, nearly 1 million of which were electric, reflecting a 30% growth compared to 2022. This growth is due to the low cost and accessibility of electric three-wheelers.

The IEA reported that electric three-wheelers in India are more than 50% cheaper to own after eight years of service, even without subsidies. Despite the upfront price being 55% higher than gasoline equivalents in 2023, the overall cost of ownership is significantly lower over time.

To support three-wheeler EVs, the government introduced the Electric Mobility Promotion Scheme 2024 (EMPS 2024)[4]. This scheme, launched by the Ministry of Heavy Industries, aims to boost electric vehicle adoption and manufacturing with a total outlay of Rs. 500 crores from April 1, 2024, to July 31, 2024. It focuses on the adoption of electric two-wheelers and three-wheelers, providing incentives for vehicles with advanced batteries. The scheme targets 38,828 three-wheeler electric vehicle (e-3Ws), including 13,590 rickshaws and electric cart or e-carts, and 25,238 e-3Ws in the L5 category.[5] The scheme may be extended in the new government budget.

Developing Countries Records Three EV Sales

Developing countries such as, India have faced an increase in electric revolution, particularly in the three-wheeler market. Its positions it as a key global player based on BNEF report which predicted that over 340 million electric two- and three-wheelers will be deployed in the next three years, significantly displacing oil demand. According the study, EVs are expected to ramp up as oil demand decreases as a result, scaling up electric vehicles can displace oil demand.

Three-Wheeler EV Shines Bright in the Automotive Segment

The International Energy Agency (IEA) recent report found that India registered 580,000 new electric three-wheelers from 2015 to 2023.[6] This is followed by China with 32,000 and the EU with 24,000 registrations, this makes India one of the largest markets.[7] This rapid growth is driven by strong policy support, such as the FAME II measure, which provided purchase incentives from 2019 to 2024. The new EMPS scheme, announced in March 2024, allocates over INR 4.9 billion (almost USD 60 million) to subsidize electric two- and three-wheeler purchases, bridging the gap between the FAME II scheme and potential future subsidies.[8]

[1] Electric Vehicle Sales Headed for Record Year but Growth Slowdown Puts Climate Targets at Risk, According to BloombergNEF Report | BloombergNEF (

[2] ibid

[3] Global EV Outlook 2024 (


[5] ibid


[7] ibid



Poonam Upadhyay, Director of CRISIL, projected that incremental demand for electric three-wheelers will grow by 50% annually due to low ownership costs and financial incentives.[1] This strong demand is expected to increase the share of electric vehicles to 19-20% of total volume in the next fiscal year, up from approximately 14% in fiscal 2024.[2] The associated growth in this segment with lower running costs make electric 3Ws economical by 30% even against CNG-powered 3Ws.

However, CRISIL study also highlighted, the demand momentum for electric 3Ws may face challenges ahead.[3] The three-wheeler may face challenge from continuance of ongoing incentives and increasing competition from unorganised e-rickshaws in the passenger mobility segment.

RMI report found that, “India’s two- and three-wheeler market accounts for 80% of the vehicles on the road to date (March 2024), with approximately 256 million two-wheelers and 10 million three-wheelers serving as a key means for passenger mobility and goods movement.”[4]

RMI in its report on de-risking electric vehicle financing found associate risk in the three-wheeler segment that makes the sector highly variable for borrowers using NTC, cash collections, and driver income. In the three-wheeler EV segment, the electric cargo three-wheelers are considered a safer segment given their ability to recoup stable revenue returns. However, e-rickshaws, auto-rickshaws may reportedly face difficulty in receiving additional lending from bankers as they try to avoid lending to due to the high-risk profile of borrowers.

Bankers hold a limited portion of financing for three-wheeler EVs to keep credit losses limited. The report suggested that the preferred route to finance this segment is by extending lines of credit to NBFCs or co-lending via NBFCs. Some banks have also extended direct loans to e-rickshaws. Moreover, bankers allocating a share of funding to electric cargo three-wheelers is considered low risk because drivers have a more stable earning potential.

[1] Domestic three-wheeler volume to scale a new peak next fiscal (

[2] Ibid

[3] Domestic three-wheeler volume to scale a new peak next fiscal (


On further De-risking measures (DRMs), the RMI study showed that DRMs can reduce EV interest rates in some cases. The report gave the example of cargo vehicle borrowers, such as startups in the MSME category with investor support, they have a stronger credit profile than most electric two-wheeler borrowers. RMI projects that DRMs can bring down the risk premium in the electric three-wheeler commercial segment, enabling a potential 200–300 basis points reduction.[1] It can lead to cost savings for the borrower through low overall interest payments, this could lead to cumulative savings of Rs. 2,200 crores for electric cargo three-wheeler borrowers, assuming EV sales in this segment can reach 60% or 300,000 vehicles in 2030.[2]


The increase in India’s global sales in electric three-wheelers market especially as it overtakes China ascertains its position as a key player in the global EV landscape. With continued policy support and financial innovations, the country is set to lead the transition to a more sustainable and economically viable transportation sector.


[2] ibid

Chitrika Grover
Author’s passion lies in solar energy, renewable resources, and related areas like biofuels. Currently serving as an Assistant Manager - Content and Growth at Saur Energy, she writes features and news articles concerning both international and national aspects of solar and renewable energy.

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