The Case for Retrofitting India's Auto-Rickshaws

This is a Guest Blog by Nitish Arora and Sahana Lokesh of NRDC India

Auto-rickshaws, or three-wheelers, are the dominant mode of public transport in medium and small cities in India, accounting for 42-76% of public transportation trips. Even in larger cities, auto-rickshaws still account for 8% of public transport. By 2030, India's extensive fleet of 7.4 million passenger auto-rickshaws is expected to grow to 11 million. Electric auto-rickshaws, however, remains as low as 0.4% of the market as of 2022. The tailpipe emissions from the auto rickshaw sector, under best case operating conditions, constitute nearly 10% of the total road transport emissions in cities. Transitioning to electric autorickshaws, by requiring new vehicles to be electric as well retrofitting existing vehicles, could help decarbonize the road transport sector and reduce urban air pollution.

The Benefits and Challenges of Retrofitting Auto Rickshaws to Become Electric

Retrofitting has emerged as a viable cost-effective solution to address the declining efficiency and increasing operational costs associated with aging vehicles, such as ICE auto-rickshaws that have already surpassed the 4-5 years lifespan. This technology effectively prolongs the operational lifespan of these vehicles by an additional 5-7 years, leading to tangible reductions in resource consumption and carbon emissions, while significantly reducing capital expenditure by at least 50-60% compared to purchasing new electric three-wheelers. In terms of material consumption, retrofitting a single auto-rickshaw can both reclaim approximately 220-230 kg of metals from the existing ICE engine and components, and save the approximately 390 kg of metals that would have been required to introduce a new auto. Given that approximately 750,000 three-wheelers across the nation will reach their end-of-life status by 2025, nationwide retrofitment initiatives offer a crucial chance to recover substantial amounts of valuable metal resources.

Retrofitting also presents a viable solution to address the significant challenge of range limitations in new electric three-wheelers (e-3Ws). By allocating a significant portion of capital expenditure towards enhancing battery capacity, retrofitting effectively tackles operational concerns. This strategic approach can extend the range of e-3Ws, thereby better meeting user needs. Converting autos to electric also offers substantial health benefits for driver partners by eliminating manual transmission.

However, there are bottlenecks to retrofitting. Given that retrofitting is still in its nascent stages in India, there are some key barriers which make the driver partners apprehensive to opt for retrofitting. Lack of affordable financing options for driver partners, permit restrictions, difficulties in getting insurance for the retrofitted vehicle, along with concerns around warranty and after-service support as well as inadequate charging infrastructure hinder the growth of retrofitting industry in the country.

New Research Identifies Solutions

Based on stakeholder consultations and new analysis, NRDC and partners have developed a white paper that looks at the current landscape for retrofitting ICE vehicles in India and offers solutions to mitigate the bottlenecks. The white paper, "Powering Progress: A Blueprint for Retrofitting Three Wheelers from Internal Combustion Engine to Electric," was released last week at a workshop, "Advancing Electrification of Passenger Autorickshaws through Retrofitment Solutions: A Blueprint for Indian Cities," held in conjunction with the Government of Telangana. The workshop featured participation from senior state officials from Telangana, Karnataka, Uttar Pradesh, and Kerala, along with river partner unions across South Indian states, technology service providers, financers, fleets, CPOs, and civil society organizations. During the event, a tripartite MoU was signed between the Government of Telangana, NRDC India, and ASCI to advance the clean mobility transition in the state of Telangana.

Key insights from the white paper are as follows:

1. Financial support could help boost adoption: Considering the price-sensitive nature of this segment, higher fiscal incentives (INR 25,000 to INR 30,000) could reduce the upfront cost of retrofit kits by 13-17%. Additionally, providing affordable financing options can help driver partners adopt this technology.
2. Broadening existing programs to include retrofitting could provide a key enabling environment: States can leverage interest subvention schemes and broaden the scope of existing programs like MUDRA and NCAP for retrofitting purposes. Furthermore, initiatives such as ZEV credits, fostering an insurance ecosystem, addressing infrastructure barriers, and promoting awareness among driver partners will further contribute to creating an enabling environment for nationwide retrofitment adoption.
3. Retrofit kit providers and regulators can help build driver confidence: To build driver partners' confidence in retrofitting technology, both retrofit kit providers and regulators have essential roles to play. Retrofit kit providers could offer a comprehensive three-to-five-year warranty, while state agencies could set prerequisite conditions requiring kit providers to establish a minimum number of retrofitment service centers in each city/state to support the aftersales market. Furthermore, advanced data sharing from kit manufacturers, OEMs and battery providers could underwrite the risks associated with retrofitted vehicles.
4. Now is the time to implement a ZEV credit mechanism in India: Globally, zero emission vehicle (ZEV) credits have been utilized for incentivising OEMS to transition to EVs. India is at a pivotal juncture where it could chart a roadmap for ZEV credit mechanism and not solely rely on incentives. Implementing a ZEV credit framework could not only incentivize manufacturers to invest in electric retrofitment technologies but also stimulate innovation and competition in the market.
5. Telangana has been pioneering retrofitment incentives: Telangana, the first state to promote retrofitment incentives, has inspired other states and Union Territories to propose similar incentives. Leveraging this first-mover advantage, Telangana has become a hub for retrofit kit providers, with 70% of them located in the state. Zero Emission Vehicle (ZEV) policies, which have been crucial in driving the adoption of clean vehicles, have become more and more common across India. In the three-wheeler segment, 11 Indian states have set ZEV targets for E-3 wheeler adoption. Six states and UTs, including Tamil Nadu, Telangana, Rajasthan, Goa, Assam, and Chandigarh, offer incentives for three-wheeler retrofitting.

Despite pioneering the retrofit incentive, EV penetration in Telangana's auto-rickshaw segment stands at just 0.92%. To operationalize the retrofit ecosystem, NRDC and its partners have also developed a potential retrofitment guide, "Power Shift: Framework for Retrofitting Three Wheelers in Telangana." This framework, based on research with key partners and stakeholders and new analysis, aims to boost the adoption and effectiveness of retrofitting in the state by providing a step-by-step guide and outlining responsibilities of all key players. Key players are already moving forward towards facilitating the widespread adoption of electric vehicles within India's auto-rickshaw sector, including a recent commitment by the Small Industries Development Bank of India (SIDBI), one of India's largest development banks, to explore financing options for retrofitted vehicles. As momentum builds and stakeholders continue to collaborate, further advancements will shape a cleaner, more sustainable future for urban mobility in India.

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