On May 19, 2023, the Indian government made a significant announcement, stating that the FAME-II subsidy for electric two-wheelers registered on or after June 1, 2023, would be substantially reduced. Specifically, the demand incentive would be decreased from INR 15,000/kWh to INR 10,000/kWh, and the incentive cap would be adjusted from 40% to 15% of the E2W’s ex-factory price, according to JMK Research.
The impact of this subsidy revision was felt across the electric two-wheeler market, with major players experiencing price hikes and a subsequent drop in sales. Ampere EV, owned by Greaves Cotton, raised prices by INR 21,000 to INR 39,100, with models Primus and Magnus witnessing the highest increase of 33% and 36%, respectively.
Start-up Hop Electric, based in Jaipur, also announced a significant 30% price hike on their electric scooters. Ola Electric’s popular models, S1 and S1 Pro, became costlier by 15% and 13%, leading to a 38% decline in sales in June 2023 compared to the previous month.
Other major players in the market, including TVS iQube and Bajaj Auto’s Chetak, also experienced considerable sales declines of 62% and 73%, respectively, due to the steep price increases.
The revised FAME-II subsidy had a significant impact on the highly price-sensitive Indian electric two-wheeler market. In June 2023, the retail sales of high-speed electric two-wheelers (HS E2Ws) plummeted to 45,734 units, representing a staggering month-on-month decline of over 55%.
Industry experts are closely monitoring the situation as consumers may now explore internal combustion engine (ICE) counterparts and low-speed E2Ws due to the reduced subsidy. The coming months will reveal the true extent of the impact on EV OEMs’ earnings and the consumer response to the costlier electric vehicles.
With the FAME subsidies set to end by March 2024, the recent subsidy revision’s implications on sales could foreshadow the future of electric two-wheelers in FY2025.
FAME-II is a government-approved scheme with a budget of INR 10,000 Crore for a three-year period starting from April 1, 2019. The scheme aims to incentivize the adoption of electric vehicles in India.
Relying on Government subsidies is not the best model. Yes it would mitigate the difficulties to some extend.
Rather than that , interest subventions, and battery swap facility etc Doyle help in lung range
The cost of the electric vehicle per se is lesser when compared to ICE , without batteries so is it not better to lease or swap batteries than load it into the basic cost ?
It’s as though the ICE is loaded for the 10 year fuel it’s going to consume !!
Exploring cost reductions due to standardisation eliminating supply chain costs in the down stream , and networking service and fast charging points will usher in better sales.
Let’s think out of the set box