India Ends Electric 3-Wheeler Subsidy as PM E-DRIVE Targets Hit 3 Months Early

The electric three-wheeler segment is officially flying on “autopilot.” As of Wednesday, December 31, 2025, the Central Government has pulled the plug on subsidies for this category after adoption targets under the PM E-DRIVE scheme were hit three months early.

The thing is, the “rickshaw revolution” doesn’t need a taxpayer-funded push anymore. Or nothing. Let’s be real, with electric models now making up over 32% of all three-wheelers sold in India, they’ve already reached that “tipping point” where the math just makes sense for the driver. Those too.

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The “Exit” Strategy: Field Notes

The Ministry of Heavy Industries sent a letter to manufacturers (SIAM) last week confirming that once they hit the target of 2.9 lakh units—which happened on December 26—the taps would run dry.

• The Segment Logic: L5 category electric three-wheelers (the bigger ones for passengers and cargo) are now nearly at price parity with diesel or CNG models when you factor in fuel savings

• The Funds: The government had set aside ₹857 crore for this. It was supposed to last until March 2026, but Indian fleet operators moved way faster than the bureaucrats expected.

• The “L3” Reallocation: Interestingly, the smaller e-rickshaws (L3) didn’t use up their funds because many failed to meet the strict “Make in India” localization rules. So, that money was actually shifted to the larger L5 models before they both ran out.

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Two-Wheelers: The 7.5% Problem

It’s an ongoing situation where scooters and bikes are the laggards. While three-wheelers are “winning,” the electric two-wheeler market penetration is stuck at a modest 7.5%.

• The Gap: We’ve sold about 18.3 lakh electric scooters against a target of 25 lakh.

• The Extension: Because of this slower uptake, the government is likely to extend the subsidy for two-wheelers into the next financial year (FY 2026-27). A final decision is expected in the next 15 days.

• Industry Shift: Major players like TVS, Bajaj, and Ather are holding steady, but Ola Electric is seeing a bit of a “slump” as the market matures and buyers become more demanding about service and reliability.

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What’s Next for 2026?

And here’s the kicker: the government is shifting the “subsidy spotlight” toward heavy vehicles. We’re talking about a ₹4,391 crore pot for 14,000 electric buses and roughly 5,600 electric trucks.

Basically, the era of “free money” for personal or light commercial EVs is winding down. The focus for 2026 is going to be “Charging Infra” and “Heavy Hauling.”

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