Why It’s the Perfect Time to Invest in the Electric Vehicle Industry

Automotive industry globally is at the cusp of a major transformation. India’s commercial vehicle market has grown by leaps and bounds due to economic liberalization, and the three-wheelers segment has a bright prospect.

Growing concerns for the environment and energy security clubbed with rapid advancements in technologies, increasing digitalization, the evolution of future technologies and innovative newer business models and ever-increasing consumer expectations are transforming the three-wheeler automotive business.

One of the key facets of such a change is the rapid development in the field of electric mobility which might transform the automotive industry like never before.  Experts suggest that this is the perfect time to invest in the electric vehicle industry, especially three-wheeler.

Need For More Sustainable Energy

Environment pollution is increasing day by day, and with the growing number of vehicles on Indian streets is adding to it. The transportation sector is one of the major contributors to CO2 emissions. India’s greenhouse emissions have grown faster than the country’s population. Therefore, there is an onus to combat climate change by building sustainable smart cities. The Government of India has been taking concrete steps in addressing climate change by promoting the Electric Vehicles Industry. As a result, E-mobility has become one of the greatest opportunities for entrepreneurs to participate.

Three-Wheelers Driving the Electric Vehicle Industry

India has been considerably late in adapting to the sustainable energy in automobiles but is soon catching up. Currently,  India is the world’s largest market for three wheelers. These 3-Wheelers or Auto Rickshaws are being used seamlessly in tandem with public transportation and for intra-city good movement. But, with the onset of sustainable energy, one can witness the influx of electricity driven rickshaws or “E-rickshaw”.

Industry experts say that e-rickshaws are the future of the electric vehicle industry, and is heading towards a promising future.

Factors Propelling the Growth

“E-rickshaws” or “Tuk-Tuks” (as called in some places), are raging nowadays. One can easily spot these electricity driven vehicles on the streets.  In fact, it is safe to say that India is currently facing an e-rickshaw revolution. Interestingly, the country has dethroned China, to become the world’s largest market for three-wheelers with the help of e-rickshaws. India is home to approximately 1.5 million electric three-wheeler rickshaws. One of the major reasons behind this “electrifying revolution” are the rickshaw drivers themselves. Drivers found that these rickshaws are quieter, faster, and cleaner and are much easy to maintain than traditional auto rickshaws.

They are also less exhausting than cycle rickshaws, which required peddling all day long. Mostly, all the drivers are now selling these cycle rickshaws and switching to e-rickshaws, as they are much easy to drive and is more profitable.

Another growth driver of this industry is a huge demand from Tier II and Tier III markets. Small towns are increasingly adopting e-rickshaws. Due to less literacy rate and a higher number of school dropouts in these cities, employability is scarce. E-rickshaws are providing them with an opportunity to earn a good amount of money with less investment.

Why Should You Invest in Electric 3-Wheeler Industry?

According to an industry expert, 11,000 new e-rickshaws hit the streets every month, and annual sales are expected to increase by about 9 per cent by 2021. Electric rickshaw franchise requires an investment of 2-5lakhs which is less compared to any other trending franchise, with an area requirement of approximately 300sqft. Franchisors anticipate around 10% return of investment with the e-rickshaw franchise. Some franchises even offer the franchise term for a lifetime, which makes it even better deal.

How Does the Future Look Like

The Electric vehicle industry has a promising future. Realising the potential of the industry for the upliftment of the economy, the government of India is providing the relevant boost to the industry. The Ministry of Finance is finalising a plan to spend about 40 billion rupees ($600 million) in the next five years to improve the nation’s charging infrastructure. Prime Minister Narendra Modi’s administration is currently focusing on promoting electric vehicles to be included in public transportation. Government has launched various schemes for the benefit of e-rickshaw drivers to boost the industry and also providing cheaper and subsidised loans. 

Also, according to a recent proposal made by NITI Aayog, states that only electric three-wheelers will be sold from April 2023. The decision has been made with the purpose of reducing carbon footprint and air pollution generated by fuel-driven vehicles. Moreover, the switch to an electric mode provides a huge opportunity for aspiring entrepreneurs looking to invest in the automobile industry.

In addition, Ola, India’s largest ride-hailing startups, is betting big on electric rickshaws. The company has plans to employ 10,000 e-rickshaws in its fleet. Thus, increasing the employment ratio and demand of e-rickshaws.