The electrification mandate for 2W ride-hailing needs to address on-ground challenges first
India’s policy focus towards promoting electric vehicles (EVs) as a clean form of transportation and to help our cities breathe better has been laudable. From providing financial incentives to enabling infrastructure creation, the government has taken many initiatives to further the cause of clean mobility over the last few years, with many hits and a few misses. The results are seen in increasing YoY EV penetration in overall automotive sales.
EVs accounted for 7.8% of overall automobile sales in India during FY 2024-25. In the preceding years, FY 2023-24 and FY 2022-23, EVs accounted for 7.2% and 5.6% of overall automotive sales, respectively. The penetration of EVs in two-wheeler (2W) sales (excluding unregistered low-speed vehicles) grew from 4.7% to 5.6% to 6.2% during this period. During this period, the EV penetration in passenger 3W (L5 category) increased from 4.6% to 12.6% to 22.8%. (Source: EVreporter India EV Report FY 2024-25).
It is important to note that these sales figures are primarily driven by market demand, supported by initial purchase subsidies, the economic benefits of utilising EV assets, the growing availability of electric vehicle models suitable for intended use cases, and environmentally friendly preference.
Policy Mandates and Challenges
Some recent government directives have set EV targets for commercial fleet operations. For instance, the Delhi government’s policy for fleet aggregators mandates that both passenger and delivery fleets achieve 100% EV status by 2030. This policy affects e-commerce deliveries, quick commerce deliveries, and ride-hailing fleets. While most fleet categories have a phased transition period of 4 to 5 years, ride-hailing passenger 2W fleets (bike taxis) are required to be 100% EV within the next 6 months. This timeline raises concerns about the immediate readiness of the ecosystem and stakeholders to comply with this mandate.
Industry Perspectives
Industry experts highlight that using electric 2Ws for passenger ride-hailing presents unique challenges compared to hyperlocal deliveries for food or quick commerce orders, which typically operate within well-defined radii around their central hubs. The nature of the challenges and their disproportionate impact on ride-hailing versus deliveries or quick commerce is discussed below. Timely awareness and intervention regarding the challenges highlighted are crucial to enable the success of government mandates, prevent financial difficulties for gig workers and control malpractices.
Specific Challenges
Vehicle fitness issues – The electric 2Ws commonly used by delivery workers are not designed for passenger hailing. While suitable for quick commerce or food deliveries due to lower package weights, these vehicles are not built to support the weight of two people (minimum 120 kg or more). The majority of these electric 2Ws are equipped with inferior quality shock absorbers, which can lead to rapid chassis damage when used for passenger hailing. Additionally, mandating the use of EVs in 2W fleets will lead many to opt for cheaper and low-speed models, many of which are direct imports of questionable quality.
Surge in malpractices – A significant number of delivery riders who currently use electric 2Ws go for low-speed models that do not require registration or a license. However, ride-hailing 2Ws must be registered with the Regional Transport Office (RTO) to be onboarded with service providers. This requirement has led to unethical workarounds where gig workers register high-speed eligible vehicles on platforms but continue to operate their low-speed 2Ws. This malpractice poses safety and security concerns, especially for women customers. Mandating the use of electric vehicles (especially to those currently owning petrol scooters or motorcycles) may exacerbate such practices.
Financial impact on gig workers – Most gig workers come from economically vulnerable backgrounds. For them, their 2Ws serve dual purposes: work and family commuting. Overnight switching to an electric 2W leaves them with stranded investments in their current vehicle. The higher cost of financing (higher interest rates for EV scooters compared to internal combustion engine (ICE) scooters), uncertainty around the residual value of used EVs, and an underdeveloped secondary market further discourage investment in electric vehicles. Moreover, the electric 2W may not meet the family’s commuting needs, making it a purely commercial asset.
Possibility of cartelisation by the fleet owners affecting income potential of the gig worker – EV financing challenges coupled with the current battery and service uncertainties, make for a risky investment for the ordinary gig worker, who may prefer to adopt a wait-and-see approach. This cautious stance may lead to the concentration of market power among fleet owners, who then effectively control the distribution of earnings, channelling a larger share of the revenue into their own pockets. As a result, gig workers could find themselves with a diminished opportunity to get a fair share of the revenue generated from the service.
Battery safety issues with fixed battery to swapping retrofits -The time required to charge vehicles during work hours results in lost business opportunities. Many electric 2W gig workers prefer battery swapping to mitigate this issue. However, converting electric 2Ws with fixed batteries to battery swapping operations is a regulatory grey area. There are no mechanisms to ensure that replacement batteries match the battery configuration approved during vehicle homologation, raising battery safety concerns.
Range anxiety in ride-hailing operations – EV Success in quick commerce deliveries does not directly translate to bike taxis. Electric fleets are more suitable for hyperlocal delivery use cases where riders operate within a defined short radius around the dark store, making managing charging/swapping and planning EV operations easier. A popular listed food delivery company uses its EV fleet for only up to a 5 km delivery distance in Delhi. However, ride-hailing and parcel pick–n–drop services often involve longer, unpredictable routes. Additionally, the lack of a robust charging or swapping infrastructure exacerbates range anxiety, making the use of EVs in these cases challenging.
Conclusion
Policies must align with market realities to ensure successful EV adoption for the discussed use cases. Achieving parity with ICE vehicles in terms of performance, reliability, financing options, after-market support, and cost is essential. Additionally, an accessible, uniform and resilient charging/swapping infrastructure is crucial. The resulting cost structures must align with the economic realities of gig workers and fleet operators. The policy should be sensitive to the fact that ride-hailing services have different dynamics compared to delivery services. Extensive stakeholder consultation, including input from gig workers, fleet operators, and civil society, is vital to ensure the successful implementation of proposed EV fleet policies.
Also Read: Leading EV Fleet Operators in India for Goods Movement
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