Electric Three-Wheeler Sales Surge Expected to Hit 1.5 Lakh Units as Subsidy Deadline Approaches

Key Highlights:

•   Surge in electric three-wheeler sales anticipated before subsidy deadline.
•   Customers are rushing to dealerships amid subsidy reduction.
•   Sales estimates project over 1.5 lakh units sold in march.
•   EV startups strategize to navigate subsidy reduction impact.
•   CRISIL predicts strong growth in electric three-wheeler sales despite subsidy cuts.

Electric two- and three-wheeler sales are likely to reach over 1.5 lakh units this month before slowing down after April 24 due to an upcoming subsidy modification. Many people are going to stores to buy electric three-wheelers before the government changes the rules and makes them more expensive.

According to multiple dealer and original equipment manufacturer (OEM) estimates, customers are flooding to dealerships. The approaching reduction in subsidies from Rs 10,000 per kWh to Rs 5,000 per kWh is driving up sales at dealerships, as the costs of electric two-wheelers are expected to rise by Rs 5,000 to 10,000 and three-wheelers by Rs 25,000 to 30,000.

According to market sources, the total number of electric two and three-wheelers sold this month is projected to exceed 1.5 lakh. Sales of electric two-wheelers may cross the one lakh mark achieved in May 2023.

In February 2024, India sold 1.3 lakh units of electric two and three-wheelers, with 82,000 electric two-wheelers and roughly 50,000 electric three-wheelers.

Ather Energy intends to partially absorb the subsidy reduction and pass on a small portion of the savings to customers. EV Startups such as BGauss Auto, which sells an average of 1,500-2,000 units each month, is monitoring the competition due to the subsidy reduction, and their response will be smart as well.

"The decrease in subsidies is leading consumers to advance their purchases in the current month, and the market is expected to see a dip from April onwards, similar to when the government reduced subsidies in June of the previous year," said Hemant Kabra, Founder and Managing Director of BGauss Auto. According to a top executive at BGauss Auto, the company is considering raising the price of its electric scooter line by $5,000 to $7,000.

The government has reduced incentives for e-rickshaws and e-carts from Rs 10,000 per kWh, or 20% of the vehicle's cost, to Rs 5,000 per kWh, with a limit of Rs 25,000. For electric vehicles, the incentive has been cut from Rs 10,000 per kWh or 20% of the vehicle's cost to Rs 5,000 per kWh, with an upper limit of Rs 50,000.

Also Read: Montra Electric Selected for RAAHI Project's Electric Auto Initiative in Amritsar

CRISIL also predicts a robust double-digit rise of 15-17% in electric three-wheeler sales by fiscal 2025. Analysts have noticed that the recent subsidy cut has had a short-term impact on e-bus and e-fleet vehicle sales, as buses and fleet vehicles are no longer subsidised.

CMV360 Says

In short, lots of people are buying electric three-wheelers before the subsidy changes. As a result, the electric three wheelers sales are increasing, with over 1.5 lakh units expected to sell this month. Companies are figuring out ways to deal with the subsidy cuts, but overall, the demand for electric vehicles in India is still looking strong.