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Unorganised Sector Dominates E-Rickshaw Segment With Low Priced Products
Most of the e-Rickshaws that sell in India are peddled by the unorganised sector in the industry. India has roughly 15 lakh battery operated three wheelers on the roads, most of which are flouting government laws.
E-Rickshaw sales have been growing at a rate of 20 percent every year. The unorganised sector sells about 10,000 electric rickshaws a month, as compared to manufacturers like Mahindra Electric and Kinetic Green Energy & Power Solutions Limited who sell about 1,500 units each.
This unorganised bunch has been selling electric rickshaws with lead-acid batteries. The batteries need to be changed between every six and eight months. In addition they do not carry any warranty. Mr Motwani, the CEO at Kinetic Green Energy & Power Solutions Ltd. feels this makes them ‘moving coffins’.
E-rickshaws are sold heavily in Delhi, and the country’s northern and eastern states of Uttar Pradesh, Bihar, and West Bengal, making them the most effective last mile connectivity solution.
Pricing is what gave the unorganised sector total domination in the sector. They sell electric rickshaws for as cheap as Rs 40,000, as compared to the over-the-1-lakh mark for an e-Rickshaw from the organised players.
Mr Mahesh Babu, the CEO of Mahindra Electric, said, “Affordability, convenience to the user and more earning potential to the driver were the reasons for the segment to boom. The unorganised segment was dominated by lead-acid based e-rickshaws till the e-rickshaw regulation was notified in 2018.”
The (FAME-II) Faster Adoption and Manufacturing of Electric vehicles scheme hasn’t help either. The price difference between e-Autos and e-Rickshaws (imported from China) is just about 15 percent (with subsidies).
Industry experts are of the opinion that the unorganised sector had a head start before e-Rickshaw guidelines were set, and that it may be a difficult task to dethrone them as market leaders.
Mr Sohinder Gill, the CEO at Hero Electric, said, “Many of the unorganised players are getting registered, which will get them into the mainstream market, thereby preventing any unfair advantages. If they ply, they will eventually get caught which will force them to drive on the organised route.”
Organised manufacturers however, remain focused at the task at hand. Exide, a company known for manufacturing batteries has announced an entry into the sector with its all -electric offering, the Neo, and companies like Mahindra Electric are investing up to Rs 1,000 crore towards developing its e-vehicle offerings.
Thoughts About The Unorganised Sector Dominating The E-Rickshaw Space
While we did not see this coming, we’re not surprised. These players entered the market way before the government thought of taking an interest in the electric industry. They made the best they could with what was available. This unorganised lot command a loyalty simply because they sell products very cheap. Other players will have to reduce their ‘selling prices’ if they want to create any form of presence in the sector.
