Pandemic Stalls The Boom For India’s Best-Selling Electric Vehicle

In the two months since the economy started reopening in phases following the world’s most stringent lockdown, Rathore, 26, the owner of Faridabad-based MP Enterprises, has barely sold 20 vehicles, six of which were e-rickshaws. That number stood at anywhere between 100 and 200 until February.

“This is the first time I have seen a massive dip in the sales, and we don’t know when the demand will revive,” he told BloombergQuint over the phone. “I’m trying to survive by selling loaders and e-garbage vehicles for the time being,” he said. “But that can’t compensate for loss of demand in the passenger vehicle business.”

India’s electric rickshaw revolution was on the fast lane until the pandemic slammed brakes on a segment leading the sales of battery-powered vehicles in India. Weaving through crowded streets, the rickshaws provides last-mile connectivity in Indian cities. The South Asian nation’s already home to nearly 1.5 million electric rickshaws—among the largest such fleets of shared mobility in the world.

Business is bad for a majority of manufacturers of electric three-wheelers and fleet operators as metropolitan cities remain shut during the Covid-19 pandemic, people work from home, and those who venture out shun shared public transport due to contagion fears.

Question Of Survival

Kumar, an Aligarh-based three-wheeler maker who didn’t want his full name revealed out of business concerns, laid off half of his 20 employees last month as sales didn’t revive after lockdown restrictions were eased. “If demand doesn’t return in the next two months, I may have to shut shop,” he said, adding that the anti-China sentiment after border tensions might makes things worse as 60% of his components are imported from that country.

Sohinder Gill, director general of Society of Manufacturers of Electric Vehicles, said small players assembling e-rickshaws may find it difficult to survive. “But the organised sector will be able to ride through it except for a few hiccups and delays on account of import substitution.”

The larger players include Mahindra Electric Mobility Ltd. that forayed in electric rickshaws with Treo, and Italian auto major Piaggio which launched its model in December.

Sales are already back to half the pre-Covid level for Mahindra Electric, according to Mahesh Babu, the company’s chief executive officer.

Until last year, there was a thrust towards electric vehicles following multiple launches by automakers across categories. Now, original equipment makers are focusing on survival in an already-battered automotive industry.

“Launching an EV isn’t going to be a priority for OEMs in the next 12-18 months or before the industry gets back on its feet,” Rahul Mishra, principal at consulting firm Kearney said over the phone.

But the dent in the three-wheeler market is going to to hurt the industry the most. That’s because they were driving adoption of battery-powered transport in India unlike in the U.S., where high-end cars like the Tesla models were influencers.

“Three wheelers are the low-hanging fruit for electrification, and if lots of these come on the road it will create higher awareness for EVs and will also build a network around it,” Sulajja Firodia Motwani, founder and chief executive officer of Kinetic Green Energy & Power Solutions Ltd., said.

A cheaper alternative to fossil fuel-powered auto rickshaws, as many as 9,000 new e-rickshaws were hitting the streets every month in India before the pandemic hit. For many, going electric also meant an upgrade from the cycle rickshaws they once pedalled. But nearly 80% of the industry is largely unorganised, relying on small players and cheap assembled vehicles from China.

Rathore of MP Enterprises said three e-rickshaw manufacturers have shut in Faridabad in the last two months and many haven’t resumed operations fearing poor sales.

Larger players like Kinetic Energy and Mayuri E-Rickshaw are working on diversification.

Some fleet owners have also asked the company to customise their existing fleet for cargo operations, she said. Kinetic has revised its annual sale target from 25,000 three-wheelers this year to north of 15,000—which will come from cargo and passenger segments.

Nitin Kapoor, managing director at Saera Electric Auto Pvt., the owner of Mayuri E-Rickshaw, said they’re focusing on two-wheelers as the demand for electric three-wheelers is barely at a fifth of the pre-Covid levels. The company, which sold 1,500 vehicles a month earlier, is now witnessing a surge in demand for personal mobility.

SmartE, which was doing nearly 1 lakh daily rides with its fleet of 1,000 e-rickshaws across India, is now operating at a tenth of its capacity. It, too, is considering transitioning to a different segment. “We’re trying to work and establish ourselves in last-mile goods delivery sector, where we have grown significantly, albeit at a lower base,” Palash Roy, co-founder of SmartE, told BloombergQuint.