PM E-DRIVE incentives for L5 electric three-wheelers end after targets are met

The EV penetration within the L5 three-wheeler segment is now estimated at around 32%.

• L5 electric three-wheeler incentives ended as targets met early
• Incentives closed after December 26, 2025
• PM E-DRIVE scheme extended to March 2028, no new funds for two- and three-wheelers

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The demand incentives for electric three-wheelers in the L5 category under the Prime Minister Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-DRIVE) scheme have come to an end as the segment achieved its approved unit target ahead of schedule, according to the Ministry of Heavy Industries (MHI).

The closure follows a letter issued by MHI on December 23, 2025, which had notified December 26, 2025, as the last date for registration of electric three-wheelers (L5) eligible for demand incentives, subject to the approved unit cap not being reached earlier. A copy of the letter was seen by Moneycontrol.

The L5 category electric vehicles (EVs) include higher-powered and larger electric three-wheelers in India, used for passenger (L5M) and cargo (L5N) applications. These vehicles are designed to operate at speeds above 25kmph and are equipped with motors rated above 0.25kW.

Under the PM E-DRIVE scheme, the L5 electric three-wheeler segment was supported for a maximum of 2,88,809 units, with a dedicated outlay of Rs 857 crore.

In an official press release issued on December 31, 2025, MHI said that the aggressive targets set for the electric three-wheeler (L5) segment had been met ahead of time, leading to the closure of incentivisation for the category after December 26, 2025.

The ministry reiterated that PM E-DRIVE is a fund-limited scheme. As per the scheme notification, once the allocated funds or unit limits for any sub-component are exhausted, no further incentive claims can be entertained. It had also clarified that if the approved target of 2,88,809 units was reached before December 26, the L5 sub-component would close immediately, and no registrations beyond the target number would qualify for incentives.

MHI also said that EV penetration within the L5 three-wheeler segment is now estimated at around 32%.

The L5 electric three-wheeler segment is among the first categories under the PM E-DRIVE scheme to have fully exhausted its approved target. However, the incentives for electric two-wheelers, and electric rickshaws and carts will continue up to March 31, 2026.

Currently, electric two-wheelers have seen sales of 18,40,007 units against a target of nearly 24,79,120 units under the PM E-DRIVE scheme. For the electric rickshaws and carts, the sales have been at 5,267 units against a target of 39,034 units.

Earlier this year, the government extended the PM E-DRIVE scheme by two years, moving its closing date to March 31, 2028. Notified on September 29, 2024, with a total outlay of Rs 10,900 crore, the scheme was originally set to run until March 31, 2026. The extension does not involve fresh financial allocation and will be funded through the unspent portion of the original outlay.

The two-year extension of the PM E-DRIVE scheme does not include any extension of demand incentives for electric two-wheelers and electric three-wheelers, which remain governed by the original timelines set under the scheme. However, incentivisation for electric three-wheelers has now been closed after the segment achieved its approved targets ahead of time.

Of the total PM E-DRIVE outlay, Rs 3,679 crore has been allocated toward direct purchase incentives across various electric vehicle categories. The scheme also provides Rs 4,391 crore for the procurement of about 14,028 electric buses by state transport undertakings and public agencies, Rs 2,000 crore for public charging infrastructure, including fast chargers, and Rs 780 crore for upgrading vehicle testing facilities. An additional Rs 50 crore has been earmarked for administrative and related expenses.