Understanding Evolution of e-rickshaws Market In India: Valve Regulated Lead-acid (VRLA) To Lithium-ion Battery

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parked auto rickshaw near building
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Opinion piece by Dr. Parveen Kumar – Senior Manager, and Subrata Chakrabarty – Senior Manager, Climate, WRI India

In India, electric rickshaws (e-rickshaws) cater to the need for first and last-mile connectivity in metropolitan cities. Of late, e-rickshaws have also emerged as the important mode of last-mile connectivity in tier-2 cities. Currently, the e-rickshaw market is dominated by valve-regulated lead-acid (VRLA) batteries. Now, the focus is shifting towards lithium-ion battery-powered e-rickshaws. However, the transition is slow. In this article, we present the current status of the e-rickshaw market, comparison of the battery and charging options for e-rickshaws in India.

Status of the e-rickshaw market in India

In recent years, the e-rickshaws have registered their presence as the intermediate paratransit mode for the first and last-mile connectivity in almost all major Indian cities. As of 2019, it is estimated that the cumulative fleet is close to 2.5 million, and it is expected to grow by 0.3 million per annum. In FY20, the total EV sales have been dominated by electric three-wheelers (e-3W) with ~82% share that consists of electric autos (e-autos) and e-rickshaws. E-rickshaw accounted for 98% of the total e-3W sales, where the unorganized players with more than 70% share dominated the market. The e-rickshaw market is expected to grow from USD 786.2 million in 2019 to USD 1394.2 million by 2025 with a CAGR of 33.3 percent. 

Currently, the VRLA battery dominates the battery technology in the e-rickshaw market to the tune of 98%; however, a few organized players have emerged in recent times with a focus on lithium-ion batteries. As per a research report, the e-rickshaw battery market is expected to increase from USD 385 million in 2019 to USD 722 million by 2024 with a CAGR of 13.2%, and the share of lithium-ion battery-powered e-rickshaw is expected to grow more than 50% by 2025. 

Battery Cost and Performance: VRLA versus Lithium-ion

The majority of e-rickshaws in India are powered by VRLA batteries, which have lower purchase and installation costs than Li-ion batteries. Although the cost of a lithium-ion battery is currently 2-3 times that of a VRLA battery, the cycle life of the former is 6-10 times that of the latter, implying that for lithium-ion powered vehicles, less money is spent on battery replacement. VRLA batteries have a cycle life of 500 to 1000 cycles, whereas lithium-ion batteries have a cycle life of 3000 to 10,000 cycles. Also, the gap in the purchase cost of lithium-ion and VRLA batteries has decreased significantly in the past decade, which further increases the economic viability of lithium-ion battery-powered e-rickshaws. 

When comparing lithium-ion and VRLA batteries, the former has a significantly higher capacity while also being two times smaller and three times lighter, a much higher Depth of Discharge (DoD), and can be safely discharged in the range of 80–100% of total capacity in each cycle, whereas the latter can only be roughly discharged up to 50%. In other words, the usable capacity of a VRLA battery is half of a lithium-ion battery.

The overall charging process of VRLA batteries is slow, requiring 6-8 hours for charging, while lithium-ion batteries can be charged in less than three hours. Li-ion batteries, besides being relatively more efficient than VRLA batteries when charged or discharged at higher rates, tend to maintain a stable cycle life up to 49°C, unlike VRLA batteries, whose cycle life drops to 50% in a hot climate (~33°C). 

VRLA batteries are 99% recyclable, but the process for reclaiming the toxic lead from the battery is not environment-friendly. Lithium-ion batteries have a lower end-of-life battery waste due to their longer cycle life. Additionally, the retired lithium-ion batteries from EVs can be used for stationary storage applications before end-of-life recycling. An efficient recycling ecosystem can help in reducing pressure on the mineral resources, while simultaneously minimizing the negative impact on the environment through optimal resource utilization. 

Charging e-rickshaws: Plug-in versus Battery-swapping

Li-ion-powered E-rickshaws can be charged much faster than VRLA powered ones. Plug-in charging of the former requires 2-6 hours with slow chargers and 10 min-2 hours with faster ones. With battery-swapping, vehicles can be charged within 2-5 minutes, while discharged batteries can be charged under a controlled environment, to prolong battery life. The maximum earning potential for e-rickshaw owners, with operations limited to an 80-90km range, is ~INR 850 on average, which could increase to INR 1800 on average with an increased range of 160km per day under the battery-swapping model, where e-rickshaw owners could visit the swapping station 2-3 times per day to swap discharged batteries with charged ones. 

In India, battery-swapping is emerging as an efficient charging alternative for e-rickshaws, with its market projected to reach USD 6.1 million by 2030, with a growth of 31.3% during the period 2020 – 2030.  In addition to the possibility of bringing the e-rickshaw prices down by at least 40 – 60%, battery-swapping could scale up the electrification of the e-3W segment through e-rickshaws. 

Nevertheless, the success of the battery-swapping model will depend on the progress of some technical and commercial challenges, which include standardization, reliability, and safety of the leased battery packs and the sustainability of the commercial business model.

Way Forward 

The dominance of VRLA batteries is attributed to the relatively high purchase price of lithium-ion batteries although the latter is more apt and better suited for e-rickshaw. Regulatory changes could compel a transition away from VRLA batteries towards the better suited lithium-ion batteries.

The currently fragmented e-rickshaw market needs to be regularized to reap multiple benefits:

  • The organized e-rickshaw OEMs can capitalize on the open-architecture platforms that are modular and scalable for cost and complexity minimization while allowing for customization according to the need of a region and/or city.
  • Technical partnerships and joint ventures will allow OEMs to secure core EV components at competitive prices while partnerships with e-commerce companies, delivery players, aggregators, etc. would be critical to building demand. Also, working with battery-swapping companies and charging infrastructure providers to develop the ecosystem. 

 

   

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