The transport sector in India includes road transport, railways, domestic navigation, civil aviation and other off-road vehicles. The transportation sector is responsible for a significant share of India’s CO2 emissions. Mainly driven by fossil fuel consumption in the road sector, transport contributes to about 12.1% of India’s energy-related CO2 emissions.
The total registered vehicles in the country grew at a CAGR of 9.91 per cent during 2009-2019. Amongst all categories of vehicles, two-wheelers account for the highest number of registration, 221.3 million by 2019 (75%), followed by Cars, Jeeps and Taxis, 38.4 million (13%).
India produced almost close to 1.1 million three-wheelers and has maintained a constant trend from 2009-10 to 2019-20. Electric vehicles have the potential to reduce emissions and related negative externalities like air pollution and other health diseases while ensuring socio-economic development. Between 2019-2020 about 3.8 lakh electric vehicles (EVs) were sold in India, of which nearly 60% (2,24,800) comprised of e-3Ws, followed by 1,52,000 e-2Ws and 3,000 e-4Ws. In 2021-22, there was an addition of 1.7 lakh e3Ws, out of which about 10,000 were e-autos.
Despite the potential socio-economic and environmental benefits of e-autos, there are several barriers associated with their adoption. To effectively address the barriers, the following categories are considered – technical, social, economic, policy, and infrastructure. The barrier assessment helped understand the gaps and identify solutions to address some of them to accelerate the e-autos adoption.
- The limited range can cause anxiety to drivers out of fear that a vehicle may run out of energy and stop.
- Customers, while buying a vehicle, would like to know the performance of the vehicle in terms of speed, power and other performance factors. EVs being a nascent technology, needs more evidence of their reliability and performance.
- Limited battery life also poses a barrier, as when it reaches 80% of its capacity, they are no longer considered useful for automotive applications.
Social factors, particularly the driver’s understanding of e-autos and their attributes, can be limited due to the non-availability of information in the public domain and an overall lack of information and outreach by OEMs and government stakeholders.
ICE autos enjoy an advantage as the technology has existed for a very long time, which increases the risk of consumers’ willingness to switch to electric vehicles, typically priced higher. This is recognised as a major barrier against the uptake of EVs. Other economic factors, such as battery replacement cost, electricity cost, and access to credit, cause the slow adoption of e-autos.
- Grid stability and frequent blackouts pose a serious challenge in preventing EVs from getting charged regularly.
- With limited charging stations, users develop anxiety about the range they can achieve and fear that their vehicle will stop suddenly.
- Lack of repair maintenance and access to the power supply is also a deterrent.
The lack of conducive policy and regulation also impacts the adoption of electric three-wheelers. Policy and regulatory measures such as purchase subsidies, special permits for aggregators and women, scrappage and retrofitting incentives, and interest subvention schemes should also be brought in.
Table below analyses the various barriers and does a qualitative assessment of the impact of removing the barrier.
Understanding drivers perspective on electrification
To further explore drivers’ perspectives on switching from traditional to electric three-wheelers, a total of 2623 interviews were conducted with auto drivers across six cities in Tamil Nadu—Chennai, Coimbatore, Madurai, Salem, Tiruchirapalli, and Tirunelvelli. Considering the confidence level of 95%, 400 auto drivers were interviewed in each of the city. In addition, to capture the qualitative aspects of the driver, focused group discussions was done in three cities — Chennai, Coimbatore and Tricy with auto drivers of diverse background.
Majority, almost 71% of the drivers own the vehicle. 31% of the drivers indicates that they get their vehicle funded with support from family and friends, about 27% indicates they make full payment from their savings or money raised from security collaterals), about 29% of the drivers rent the vehicles and only a small fraction about 13% of the drivers avail loans from financial institutions. Of all cities, Coimbatore has the highest share of ownership (87%) while Madurai has the lowest share of ownership (44%). Tirunelveli and Tiruchirapalli have ownership levels close to 80%. Salem has ownership level of about 67%.\
Majority, almost 71% of the drivers own the vehicle. 31% of the drivers indicates that they get their vehicle funded with support from family and friends, about 27% indicates they make full payment from their savings or money raised from security collaterals), about 29% of the drivers rent the vehicles and only a small fraction about 13% of the drivers avail loans from financial institutions. Of all cities, Coimbatore has the highest share of ownership (87%) while Madurai has the lowest share of ownership (44%). Tirunelveli and Tiruchirapalli have ownership levels close to 80%. Salem has ownership level of about 67%.
About 83% of the drivers earn less than Rs 25,000 per month. Any transition to electric vehicles needs to ensure that there is no additional burden on driver partners that adversely affects their living.
Almost 57% of the drivers operate diesel autos. And bout 55% of the total vehicles were purchases in the last 6 years. These vehicles will be the last to transition to electric autos as drivers/owners would want to ensure there is maximum return over the life of the auto before purchasing a new vehicle. Almost 20% of the vehicles are older than 12 years. Coupled with right policy measure and incentives these vehicles can be the first to transition to electric autos. Another 26% of the vehicle are aged between 7-11 years. These would be the second category of the vehicles that should be encouraged to transition to electric autos. Scrappage incentives for older vehicles will be helpful for accelerating the adoption of electric autos.
In terms of operation, almost 75% operate on for-hire model. Another 13% operate their vehicles through ride hailing platforms while the remaining 12% operate on a shared model basis. Across cities, for-hire is the dominant operation type. Ride-hailing is dominant in Chennai and Coimbatore. Services are available in Madurai and Tiruchirappali as well. Almost 99% of the operation type in Tirunelveli are for-hire, whereas shared services are dominant in Tiruchirappali and Salem.
Ride-hailing needs max range followed by shared operations and then for-hire. Alternatively if range of 100 km is available and can be extended by 30 km through charging during day, all vehicles will be feasible
|Row Labels||For-Hire||Ride-hailing (Ola/Uber)||Shared||Overall|
While generally there was willingness to transition to electric autos, several challenges mentioned below were raised in the discussions:
- Need for financial incentives and subsidies from government would be important in transitioning to electric vehicles. With higher down payment and high interest rates, the transition would be difficult without any fiscal support as the union also does not offer any financial support.
- There was willingness indicated to retrofit the vehicle to electric autos if the cost was less than 50% of the procurement cost of a new electric auto.
- FGD group also expressed the need for supporting infrastructure including charging for transitioning to electric autos.
- Need for new models/variants of electric autos was identified. Information on technological performance of vehicles would be very helpful in accelerating the transition to electric autos.
- In spite of exemption from permit fees, licensing fees and road taxes, driver partners indicated that information on resale value, battery replacement costs, ability to make profits, would be important factors to transition to electric autos.
- Most of the drivers, indicated that they would prefer owning a vehicle compared to renting. Therefore, when transitioning to electric autos, the high capital cost would be a barrier. Hence, need for financial incentives becomes even more imperative.
- Government schemes are lengthy and time-consuming and hence if the process is simplified and hassle free, drivers will feel confident to transition to electric autos. This clearly indicates a need for an institutional structure like an EV cell to support the transition.
- Though not directly related, one of the major concerns expressed by drivers was the need for auto stands due to parking challenges. This will be important factor to be addressed while deploying public charging infrastructure for electric auto at the auto stands.
It is important to understand the operation cost of the three-wheelers over their life cycle or in other words the “Total Cost of Ownership (TCO)”. Total cost of ownership of a vehicle is the sum of all costs incurred during the lifetime of a vehicle including the capital cost, operational and maintenance cost. It is a key determinant in assessing the willingness of consumers to shift to EVs. The TCO analysis based on:
- Survey data for operational parameter assumptions
- Technical brochures from electric 3W manufacturers
Based on the analysis, TCO at the end of each year is shown in table shown below. As seen, TCO parity is achieved in the 4th year without subsidy.
|LPG||₹ 14.86||₹ 9.19||₹ 7.31||₹ 6.36||₹ 5.80||₹ 5.42||₹ 5.15||₹ 4.95|
|Electric with subsidy||₹ 18.31||₹ 9.86||₹ 7.09||₹ 5.74||₹ 4.95||₹ 4.45||₹ 4.11||₹ 3.87|
|Electric without subsidy||₹ 21.25||₹ 11.33||₹ 8.07||₹ 6.47||₹ 5.54||₹ 4.94||₹ 4.53||₹ 4.23|
|Diesel||₹ 14.34||₹ 9.31||₹ 7.63||₹ 6.79||₹ 6.29||₹ 5.95||₹ 5.71||₹ 5.53|
Taking FAME II subsidy into consideration (Rs 10,000/kWh for up to 7 kWh), TCO parity can be achieved in the 3rd year. Additionally, if state subsidy of Rs 2,000/kWh is offered on top of FAME II subsidy, TCO parity will be achieved in 2nd year itself.
To support the electrification of three-wheeler in Tamil Nadu as committed in the Tamil Nadu Electriv Vehicle Policy, a detailed roadmap for electrification needs to be implemented, ideally at the city level. In the table below are the set of recommendations to be taken up by the state:
|Recommendations for Electrification||Responsible Entity||State Role||City Role|
|Governance and institutional structure||State and City||State level institution for ensuring support to all cities, framing policies, defining incentives, monitoring framework for evaluation, revisions to the policy and Skill Development program in collaboration with the industry||EV cell at city level for implementation of the road map|
|Setting Targets with a phase wise implementation plan including awareness campaigns||State and City||Overall state target set by State|
State wide awareness campaigns, promotional activities and videos etc.
|City level roadmap with year wise targets|
City wide awareness campaigns, promotion activities, engagement with auto unions, exhibitions for product demonstration, videos for promoting benefits of electric autos including reduced maintenance, noise reduction and other environmental benefits
Demonstrate use cases- last mile connectivity, low emission/zero emission zones for electric autos
|Permits and regulatory measures to support the transition||State||Open Permits encouraging LPG/CNG autos to switch to electric|
Priority permits for electric autos over LPG/CNG
Target a year for complete ban of Diesel/CNG/LPG autos
Scrapping policy to be adopted by the state supported by incentives
|Provide inputs and feedback on effectiveness of each policy to the state committee|
|Fiscal incentives for accelerating the e-autos adoption||State||Purchase subsidies for electric autos|
Road tax waiver and registration waiver for consideration beyond December 2022
Scrappage incentives (which can be a form of purchase subsidies) for buying electric autos
|Smart city funds for allocation towards electric autos purchase (in the form of subsidies)|
Cities can leverage credit access platforms developed by private players for evaluating credit risk for providing loans to auto drivers. Use telemetric data such a daily utilization, frequency of service, and other parameters.
|Developing a robust charging network||State and City||Incentives for charging infrastructure installations||City level charging infrastructure plan taking into consideration all modes and electric autos|
Public-private partnerships for deploying public charging for electric autosLocation planning, number of public chargers required
Amendment to building and construction laws to ensure that charging infrastructure is integrated including in new and existing buildings (government buildings as well)
Business Models, Public-Private partnerships for deploying electric autos
Written by: Faraz Ahmad
Edited by: Keshav Suryanarayanan