Problems with India’s e-Rickshaw industry and how to address them

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This article was first published as a part of March 2021 edition of EVreporter e-magazine.

The existing e-rickshaw manufacturing structure in India is horizontal in nature.

Majority e-rickshaw manufacturers in India are assemblers. They either buy CKD (completely knocked down) units from China or buy tyres, lights, seats, horns, rear view mirrors, and other components off the shelf in volumes locally or import at the cheapest price. They then assemble the parts together in their manufacturing facilities at a minimum cost to make the final product.

The most critical component of an e- rickshaw is the drive train that includes motor and controller. In Bill of Materials (BOM) of an e-rickshaw, cost of the drive train components is the highest. The challenge faced is the availability of quality motors and controllers at a ‘value’ price. To control the manufacturing cost, majority of the manufacturers end up using sub standard drive train components – both imported and local.

Government guidelines for e- rickshaws stipulate that the motor capacity should not exceed beyond 2kW. Majority of manufacturers use motors between 800 W and 1.2 kW capacity to comply. The motor voltage used is 48V, which has become the de facto motor specification driven by the 48 V lead- acid batteries used in the introductory phase of e-rickshaw revolution.

This has resulted in a mismatch between the theoretical load carrying capacity of a 48V, 800 W or a 1.2 kW motor and the real-world scenario of overloading.

It is a common practice to carry more than the prescribed limit of four passengers. This affects both the motor life and the battery life – be it Li-ion or lead acid, thereby reducing the life of the vehicles by 2-3 years.

On similar lines, assemblers do not invest in high quality composite materials for the vehicle body or in light and robust chassis.

The design of the traditional L5 category auto never changed in the last 40-50 years, and similarly we see the design of an e-rickshaw has not changed from its introductory days in the last decade. Manufacturers have not focused on the product design. Almost all e-rickshaws introduced till date are same in design, features, and functionalities.

Hence, e-rickshaws have become a commodity and vehicle price has become the only differentiation for manufacturers.

Customers of e-rickshaws belong to low income category whose disposable income and ‘willingness to pay’ for the product is low. They typically rely on bank financing. However, as the quality of the vehicle is poor and the life of the vehicle sort, lending institutions typically charge high lending rates, in twenties, to mitigate their risks. In big India cities, many customers are migrants from rural areas of other states, which increases the risks of the lending institutions.

There are more than 300 e- rickshaw manufacturers or assemblers in India who jockey to sell their vehicles, a commodity, to this customer category with price as the only differentiator. They face dual challenges of low disposable income customer group and reluctance of the lending institutions.

What is the way out for the industry?

Assemblers/manufacturers can focus on using better quality and higher capacity drive train components by collaborating with component manufacturers in design phase and developing components grounds up. Good quality and higher power motor capacity such as 60 V and 1.2 kW and quality controllers will enhance the vehicle life as powerful motors will help the vehicle to carry higher loads without damaging the motor, the battery and the vehicle. The vehicle life can also be increased significantly by using high quality composite materials for the vehicle body and developing light and robust chassis.

The manufacturers who can deliver an e-rickshaw with a longer vehicle life will be able to differentiate their product, albeit at a higher price initially. Over a period of time, the unit prices will come down with scale. Such vehicles will also give confidence to the lending institutions.

The other approach could be that assemblers/manufacturers pivot to become design and development companies focusing only on design and development of the vehicle, including the vehicle body, chassis, etc.; and outsourcing the engineering, supply chain management, assembly, and manufacturing of the vehicle to experienced contract manufacturers.

In such an arrangement, everyone will focus on creating value in their core area of competency. It will help to reduce the overall cost through scale and efficiencies, deliver quality vehicles, and shorten the time span from design to launch a new vehicle.This approach has been recently adopted by US-based Fisker, an electric passenger car player, which has outsourced engineering, supply chain management, assembly and manufacturing of the car to contract manufacturer, Foxconn.

Written by – Anindya Roy, Director – Sales and Marketing, Emobi (Bengaluru)