The Indian government is considering reallocating subsidies within the PM E-DRIVE scheme due to the unexpectedly high demand for cargo electric three-wheelers (L-5 e3w). Sales of L-5 e3w have surpassed expectations, depleting allocated funds, while e-rickshaw and e-cart sales have significantly underperformed. The shift aims to utilize unused funds from the e-rickshaw/e-cart category to support the thriving L-5 e3w segment.
"Sale of eligible e-rickshaws and e-carts have lagged. Subsidies earmarked for them will be used for L-5 e3w where strong demand is being registered," a senior official told ET.
The ministry of heavy industries currently offers an incentive of ₹2,500 per kWh for domestically manufactured electric two-and three-wheelers registered on and after April 1, 2025.
These sops are available till March 2026, or until the subsidy runs out.
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These demand incentives are under the ₹10,900 crore-PM E-DRIVE scheme, which also has allocations for electric buses, charging stations, and testing agencies upgradation, among others. The scheme approved in September 2024 earmarked ₹715 crore subsidy for 2,05,392 cargo e3w. Another ₹192 crore was allocated for subsidising 1,10,596 e-rickshaws and e-carts.
At 155,085 units, more than 75% of the target for the sale of L5-e3w has already been achieved by May 2025-end. But the e-rickshaw and e-cart category has grossly underperformed the other segments, achieving just 2% of the scheme target at 2,736 units. Under the electric two-wheeler category, 1,198,707 units have been sold, meeting 48% of the scheme target.
ET reported in November 2024 that cargo e-3w sales were zooming, causing the fiscal 2024-25 target to be achieved in a few weeks of the scheme's launch. This prompted the centre to amend scheme guidelines, allowing continued subsidies but lowered per unit incentive and tapping into allocations made for fiscal 2025-26.
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