India’s E-Rickshaw Market Slowdown: How the L5 Upgrade Changed the Game

For nearly a decade, India’s e-rickshaw ecosystem shaped the country’s last-mile mobility. Low purchase cost, simple maintenance and rapid urban penetration pushed these vehicles into almost every congested pocket of Tier-1, Tier-2 and even rural markets. But the rhythm that once drove the segment now slows and the reasons sit deeper than a casual observer might assume.

The overall three-wheeler market, which earlier moved at roughly 60,000 units per month during FY2019–FY2020, has expanded to an impressive 115,000–120,000 units per month today. This rise, however, does not reflect uniform growth. A significant portion of the earlier boom came from the e-rickshaw and e-cart sub-segment, which currently contributes nearly 45,000 units monthly. These vehicles once served as a “true last-mile solution,” especially in regions where affordable mobility remained scarce. Yet this same segment now shows visible fatigue.

Bajaj Auto Ltd. validated this shift publicly. At the launch of its new e-rickshaw, Bajaj Riki, held in Delhi, Samardeep Subandh, President of the Intra-City Business Unit, described the current trend as “some sort of temporary stagnation.” He noted that “e-rickshaw growth has stopped over the last three to four quarters,” indicating a cooling phase rather than a collapse. Subandh linked this pause to evolving buyer expectations and growing competition within the upgraded category.

The heart of the slowdown connects directly to the L5 upgrade, a regulatory and product-class shift that pushed the category toward stronger, safer and more performance-oriented electric autos. Under the L5 structure, manufacturers face stricter homologation norms, higher battery and chassis standards and greater overall vehicle robustness. These requirements increase manufacturing costs and the ripple reaches the market instantly. The once-dominant low-cost e-rickshaw, which operated in an unorganized and lightly regulated environment, now competes with L5-certified models that promise better earnings for drivers but demand higher upfront investment.

Drivers who once preferred inexpensive, entry-level e-rickshaws now reconsider the economics. Many lean toward L5 electric autos, which offer longer range, higher load capacity and superior durability. Subandh emphasized this migration, stating that “a lot of customers are upgrading here,” confirming what industry data already signals.

As L5 models gain traction, informal manufacturers who once powered the e-rickshaw boom struggle. Their products, typically cheaper and less standardized, face compliance pressure. Organized OEMs expand aggressively, while unregulated workshops lose ground. This structural correction slows short-term sales but strengthens long-term market stability.

Another barrier shaping the downturn rests in the financing ecosystem. Earlier, buyers secured quick, low-document loans for basic e-rickshaws. Today, stricter L5 pricing alters that equation. Financial institutions analyze risk more carefully, often demanding higher down payments or rejecting borderline credit profiles. For a segment dependent on small-scale drivers, this shift influences purchasing decisions immediately.

In addition to urban congestion regulations, state-level permit caps and changing mobility policies, the demand for e-rickshaws is also changing. Many areas are currently reviewing their level of e-rickshaw saturation and adjusting registration processes accordingly. Simultaneously, the increased competition from e-autos, low-cost internal combustion engine (Ice) three-wheelers and shared mobility fleets is providing greater choice for both commuters and operators.

While there has been a decline in sales, the future growth trajectory is still positive. A more compliant, more regulated and more technologically advanced three-wheeler ecosystem will improve safety and reliability and as L5 manufacturers continue to develop L5 products and financing models adapt, demand will stabilise over time. Therefore, the current phase is one of transformation rather than decline.

While India’s e-rickshaw market started the decade as a symbol of rapid electrification, the launch of L5 upgrades will reset expectations and require the sector to recalibrate. The process may appear slow, but the movement toward a more robust and sustainable mobility landscape is definitely underway.

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