Symbolic picture only.
According to a new white paper, complete electrification of India’s entire fleet of two- and three-wheelers, which is the largest in the world, will require funding of $285 billion (about ₹23 lakh crore).
Published in association with NITI Aayog, The World Economic Forum (WEF) paper said that last-mile and urban delivery fleets are leading the adoption of electric two-wheelers and three-wheelers in India and are likely to be the first segment to transition completely to electric.
But driver-cum-owners are hesitant to make the transition to electric due to the high upfront cost of acquisition, lack of confidence in the new technology, uncertain reliability and unattractive resale value.
Two-wheelers and three-wheelers account for over 80% of vehicle sales in India and the adoption of electric vehicles has been steadily increasing over the years.
The otherwise consolidated auto market has about 45 certified manufacturers of electric two-wheelers and three-wheelers in India and cumulative sales of these vehicles have reached one million units.
However, this is a small part of the country’s total two-wheeler and three-wheeler fleet stock of 250 million, leaving a lot of room for continued growth.
“Getting 100% Electrification of two and three wheelers in India Around $285 billion in capital allocation is needed, the WEF said.
Explaining the calculations, it said that given India’s rising income and vehicle ownership, it has projected the total stock of two-wheelers and three-wheelers to rise to 270 million.
The capital cost for its conversion to electric is calculated based on an average two-wheeler cost of $1,000 (over ₹81,000) for 264 million two-wheelers and an average three-wheeler cost of ₹3,500 (₹2.8 lakh) for 60 million. Is performed. Three-wheelers (among vehicle categories, except e-rickshaws), bring the total capital cost to about ₹285 billion.
“Electric vehicle turnover rate And the cost of infrastructure has not been taken into account – and this will require additional financing,” it added.
Although electric vehicles (EVs) are expensive to buy, their running costs are very low. On a total cost of ownership basis, they are already being considered better for ride-hailing and last-mile delivery fleets that have higher daily usage.
These segments are leading the adoption of electric two-wheelers and three-wheelers in India and are likely to be among the first segments to transition completely to electric.
“But for rapid transition of fleets, capital inflows into the ecosystem need to increase manifold and reduce market risk through deeper collaboration between stakeholders and business model innovation to open up larger capital pools,” WEF said. will need to be done.”
It also said that a long-term policy roadmap is needed to attract more investments.
“Purchase incentives by governments have been the key driver for EV adoption, but a policy roadmap for demand incentives beyond the current period of policies (typically up to 3-5 years) could help,” WEF said.
While incentives will eventually need to be phased out, a roadmap for a gradual phase-out could help support new corporate investment decisions.
“This could be further supported by an ambition for a combustion engine phase-out date for new two-wheelers and three-wheelers,” WEF said.