When we talk about electric three-wheeler growth, we usually think about selling more new vehicles.

But a recent policy move in Hyderabad, one of India's largest cities, suggests another path.

The government of Telangana, the southern Indian state where Hyderabad is located, has approved a programme targeting 18,766 existing petrol and diesel auto-rickshaws in the city's core urban area.

Owners will have two options:

retrofit the existing vehicle with an approved electric kit

or

replace it with a new electric auto-rickshaw.

Financial support can reach up to ₹1.5 lakh per vehicle.

What interests me is not only the size of the programme.

It is the idea behind it.

Electrification does not always start with a new vehicle

Many countries already have large three-wheeler ecosystems.

The drivers already exist.

The routes already exist.

The workshops, dealers and spare-parts channels already exist.

So the question is sometimes not:

"How do we create demand for electric three-wheelers?"

It is:

"How do we electrify an existing three-wheeler economy?"

That is a very different market-development problem.

For some vehicles, retrofit may make economic sense.

For others, replacing the complete vehicle may deliver better reliability, safety and lifecycle cost.

And that creates opportunities for different parts of the supply chain:

battery systems, motors, controllers, conversion kits, new vehicles, service networks and financing.

The installed base may matter more than we think

From where I sit in the supply chain, I think manufacturers often focus too much on annual new-vehicle sales.

But in three-wheelers, the installed base can be just as important.

A city with tens of thousands of existing ICE three-wheelers already has something extremely valuable:

users who understand the vehicle category.

They do not need to be convinced that a three-wheeler is useful.

They only need a better reason to switch the powertrain.

That could make some emerging markets electrify faster than their current EV sales numbers suggest.

The next electric three-wheeler opportunity may therefore not always be a completely new market.

It may already be driving on the road today.

For manufacturers and distributors, that raises an interesting question:

In your market, will three-wheeler electrification happen mainly through new vehicle sales, or through replacement and retrofit of the existing fleet?

Originally published on LinkedIn: The Next Electric Three-Wheeler Market May Already Be on the Road

Cover photo by Surya Teja on Unsplash.