India's electric vehicle boom is built on mopeds and rickshaws, not Teslas

Electric mopeds and three-wheeled rickshaw taxis are zipping along India's congested urban thoroughfares. PHOTO: NYTIMES

NEW DELHI - In the United States, luxury car buyers are snapping up Teslas and other electric cars that cost more than US$60,000 (S$84,000), and even relatively cheap models cost more than US$25,000.

In India, those are all out of reach of the vast majority of families, whose median income is just US$2,400.

But an electric vehicle movement is taking place nonetheless - not on four wheels, but on two and three.

Electric mopeds and three-wheeled rickshaw taxis that sell for as little as US$1,000 are zipping along India's congested urban thoroughfares, cheered on by environmentalists and the government as a way to clear some of the oppressive smog.

India's success with the low-cost vehicles is also providing a template for how developing countries could ditch combustion engines and combat climate change without pricey electric cars.

Consider Kuldeep Singh. Twice a day, he replaces the depleted lithium-ion batteries in his sky-blue Piaggio electric rickshaw with fully charged ones at swapping stations around New Delhi.

"The best thing is, there's no pollution," said Singh, who pays about half as much for fresh batteries as he would to fill the tank of a conventional rickshaw. "I feel proud and that India will become stronger."

Indian automakers sold 430,000 electric vehicles in the 12 months that ended in March, more than three times as many as a year earlier. Most were two- and three-wheeled vehicles, with cars accounting for just 18,000, according to industry data.

Americans bought about 487,000 new electric cars in 2021, a 90 per cent increase from 2020, according to Kelley Blue Book.

Almost 15 years ago, Indian tinkerers and small businesses began importing electric motors and lead-acid batteries from China to assemble cheap vehicles. With little regulation, the vehicles became popular, causing safety and other problems. But they also created a space for startups and established automakers looking to build something sturdier.

Now the Indian government and auto industry are betting heavily on affordable electric vehicles. Competition and subsidies have made electric mopeds and rickshaws as cheap as or cheaper than internal-combustion-engine models.

For a couple of hundred dollars, some startups are converting combustion-engine vehicles to battery power. At the same time, the recent surge in oil and natural gas prices has made it much more expensive to operate combustion-engine vehicles.

"There are many regions in the world which don't buy a US$60,000 car," said Bhavish Aggarwal, the 37-year-old founder and chair of Ola Electric, which makes electric mopeds at a factory in the southern state of Tamil Nadu.

An Ola Electric factory, which makes electric mopeds and employs about 2,000 people in the southern Indian state of Tamil Nadu. PHOTO: NYTIMES

"Technology to serve in hotter, dustier climates or more potholed roads is very different," he added. "India is like a very nice microcosm of the rest of the world. If we can build it here, it will be very relevant beyond."

Starting with smaller vehicles makes economic and environmental sense for India. Most of the country's transportation fuel is used by two- and three-wheeled vehicles, and car ownership is incredibly low: There are just 22 cars per 1,000 people in India, compared with 980 per 1,000 Americans.

"If you are able to electrify two-wheelers and three-wheelers, you will have changed the game," said Amitabh Kant, a former CEO of Niti Aayog, the government agency that created a subsidy programme for electric two- and three-wheeled vehicles in 2015.

India's experience could have global ramifications. Billions of people in Africa, Asia and Latin America don't own cars.

India already sells cheap combustion-engine vehicles to Africa, Latin America and other parts of Asia, and executives and government officials hope to eventually also export lots of electric vehicles.

One of the government's biggest goals is to make a dent in the noxious air pollution in many large cities, especially New Delhi.

Competition and subsidies have made electric mopeds and rickshaws as cheap as or cheaper than internal-combustion-engine models. PHOTO: NYTIMES

Battery-powered vehicles will not eliminate that pollution since three-quarters of India's electricity comes from coal-fired power plants. Even electric models that get their energy from coal plants are generally responsible for less greenhouse gases overall than gasoline models.

India is also investing heavily in solar energy, and Prime Minister Narendra Modi pledged last year that the country would get half its energy from sources other than fossil fuels by 2030.

"The transition to electric vehicles has to come hand in hand with electricity production," said Fatima Arroyo-Arroyo, an urban transport specialist at the World Bank.

The transition clearly will take time. Indian automakers sold more than 16 million cars, buses, mopeds, rickshaws and other vehicles in the 12 months that ended in March, and only 2.6 per cent were electric.

But some parts of the market are changing fast: More than 45 per cent of three-wheeled vehicles were electric.

For drivers of rickshaws like Singh, the main attraction is the money they can save on fuel so they can take home a larger chunk of their fares.

"It gives livelihood to our customers," said Suman Mishra, CEO of Mahindra Electric, which makes rickshaws and other electric vehicles. "So it has a huge social impact."

Manufacturers say their biggest problem is keeping up with demand.

Ola has built its factory in the middle of a sea of palm trees in a small town, Pochampalli, near Bangalore. The factory employs about 2,000 people, all women. Few Indian women work in manufacturing, and the company wants to show that they can.

Aided by robots, the women test cells, build battery packs and assemble mopeds that start at about US$1,200 and are shipped directly to customers.

Workers at the Ola Electric factory in the southern Indian state of Tamil Nadu. PHOTO: NYTIMES

Aggarwal, the Ola CEO, said the switch to battery power was unlikely to happen if the world relied only on large automakers like Tesla and Ford Motor.

Big manufacturers are raising prices by thousands of dollars and might never get around to making electric vehicles that are widely affordable in India and Africa.

Low-cost electric vehicles, of course, exist in other countries.

China is a leader in small battery-powered cars. A joint venture of General Motors, SAIC and Wuling sells a four-passenger electric car for US$4,500. With a top speed of about 60 mph (96 kph) and a range of 100 miles (161km), the Wuling Hongguang Mini EV is well suited to cities.

India is showing that there is a huge market for even cheaper vehicles.

But it is not clear whether India can scale up production to transform its own transportation system and help bring affordable electrics to other developing countries. The raw materials to make batteries are in short supply worldwide, and Indian automakers have to compete for them with larger companies like Tesla and GM.

For now, most Indian officials and executives agree that their main focus should be to increase the use of electric mopeds and rickshaws.

Zypp Electric scooter riders wait for their delivery orders outside their office in New Delhi. PHOTO: NYTIMES

Sales of electric vehicles fell sharply last spring after a series of moped fires, including one that killed a man and his daughter. Many of these involved the older generation of electric vehicles, but one involved a scooter made by Ola.

Aggarwal said imported batteries and cells were to blame for many of the fires. Ola will soon make its own batteries, with government subsidies, that he vows will be safer.

India has a lot of catching up to do in other areas. There are about 930 public charging stations, according to the government, compared with about 2.2 million in China.

Modi's government is offering businesses subsidies to build more chargers. NYTIMES

Join ST's Telegram channel and get the latest breaking news delivered to you.