Leading electric scooter manufacturers are differed on how much the FAME II (Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicles) subsidy decrease by a third on each scooter would affect sales. However, a lot of participants agree that the choice will enable them to adjust their strategies, lower their expenses, and be ready for a future without subsidies starting in April 2024. On 17th May, the Centre decided to reduce the FAME II subsidy for electric two-wheelers from its previous rate of Rs 15,000 per Kwh to Rs 10,000 per Kwh. Additionally, the maximum subsidy ceiling of 40% of the vehicle’s ex-factory price has been reduced to 15%.
Sohinder Gill, CEO, Hero Electric, said, “We feel this sharp reduction in the subsidy is going to hurt the market and the adoption of E2Ws may go down substantially. The premium bikes enjoying a subsidy of around Rs 60000 were having a dream run of sucking almost 80% of the subsidy in the last few months because of near absence of start-ups/incumbents were nearly absent in the market due to their more than Rs 1200 cr subsidy stuck. These premium bikes may now see the biggest decline because the reduction in their subsidy is also the highest. These OEMs may now rush to launch stripped down versions of their models to try and keep the market shares.”
He said that MHI was left with no choice but to either suddenly stop the subsidy or to somehow manage the rest of the year with greatly reducing the budget and drawing some unspent money from the E3W budget. “A gradual transition with sustained subsidies would have been ideal to ensure market growth and reach the international benchmark of 20% EV market share. However, the sudden massive reduction of subsidy will likely lead to a major decline in sales, impacting the entire industry for a considerable period of time. In the larger context this may be a retrograde step leading to higher bills of crude oil imports and adding to the ever-increasing air pollution in most of the cities,” Gill added.
Sushant Kumar, Founder and Managing Director, AMO Mobility said, “We welcome the government’s commitment to increasing the outlay for e-2 wheelers under the FAME II scheme, emphasizing their dedication to promoting electric vehicle adoption and sustainable mobility in India. As an EV OEM, we are dedicated to providing reliable, sustainable and affordable electric mobility solutions.” “While potential subsidy reductions may affect prices, we are confident in our ability to navigate this challenge through innovation and operational efficiency. At AMO Electric Bikes our goal is to ensure the paradigm shift from conventional mobility to electric mobility. With increased support and our cost-effective solutions, we will drive the growth of electric mobility and shape a greener future in collaboration with the government,” he added.
