Reduced FAME II subsidies will hit EV sales in India, says manufacturers group

Looking to buy an Ola Electric or Ather Energy electric scooter. Starting in June, people will have to pay more to ride home on a brand new electric two-wheeler. The center has approved a proposal to reduce subsidies for electric two-wheelers from 40 percent to just 15 percent from next month. The move sparked a reaction from a manufacturer’s group, which said it would hit electric vehicle sales in India hard.

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Updated on:
May 23, 2023 at 15:53 ​​pm

The Ather 450X (left) and the Ola S1 Pro may be pricey, but they also offer plenty of tech-based features. The Okinawa Praise Pro puts ride quality and character first.

The Society of Manufacturers of Electric Vehicles (SMEV) also believes that the decision will further slow the adoption of EVs in the country. Sohinder Gill, director general of SMEV, said: “A sudden reduction in subsidies could lead to a significant decline in the adoption of electric vehicles, affecting the entire industry for a considerable period of time.” The widening price gap between model and electric models will ultimately affect sales. He also suggested a phased reduction in subsidies for electric two-wheelers to ensure continued growth in the EV market.

On Monday, the center approved the Heavy Industry Ministry’s proposal to reduce subsidies for electric two-wheelers purchased on or after June 1. Customers can only get 15 percent of the total cost of the electric two-wheelers, according to a notice issued by the ministry. Electric two-wheelers are returned as subsidies.For example, the pre-showroom pricing of an electric two-wheeler purchased by a customer is ¥100,000 people are accepting ¥So far, the subsidy under the FAME II program is 40,000.From June 1st, the amount will be reduced to ¥15,000, a price increase of nearly 25%.

While most of the major electric two-wheeler manufacturers have yet to make any official announcements about the decision, some start-ups have welcomed it. Siddharth Kabra, Co-Founder and CEO of VoltUp, said: “With the subsidy reduced to 15%, it is clear that the electric vehicle ecosystem in India is growing rapidly and there is demand. While the direct impact of the subsidy reduction will be higher prices and lower sales, The government has allowed the industry to be independent to some extent.” Nikhil Bhatia, co-founder and CEO of HOP Electric Mobility, said: “The phasing out of subsidies was a forward-looking move and now is the time to phase out the reliance on subsidies. “He said.

The center’s decision could affect customers of Ola Electric, Ather Energy and other well-known e-scooter brands.Most of their EV pricing is in ¥One hundred thousand or more. Ola Electric is currently the leader in the field, followed by Ampere, Okinawa, Ather and others.

First published date: May 23, 2023 at 15:53 ​​PM CST

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