The Ministry of Heavy Industries has sent a recommendation to slash the existing subsidy on electric two-wheelers from 40 per cent to the total sales price to 15 per cent. The government calls the step to be beneficial for a large number of Ev two-wheelers buyers.
According to the current Faster Adoption and Manufacturing of Electric Vehicles (FAME) II guidelines, Rs 15,000 per kWh of battery (limited to 2kWh) or up to 40 per cent of the cost of an electric scooter, is adjusted in the ex-showroom price as a subsidy.
Whereas there will be no change to the Rs 15,000 subsidy per kWh subsidy has been reported. The government has been promoting electric vehicles on a larger scale but cannot keep them subsidised for an unlimited time period as it affects the business and overall revenue model.
Pankaj Goyal, Co-Founder and COO of AutoNxt Automation commented regarding the step, “As an electric vehicle (EV) tractor maker, I am concerned about the recent decision to cut EV subsidies on two-wheelers in India. The subsidy cuts on two-wheelers should not send a negative signal to the market and slow down the adoption of electric vehicles in general. It is crucial to create a favourable environment for EV manufacturers and consumers alike, encouraging them to transition to cleaner and more sustainable modes of transportation.”
The electric vehicle ecosystem requires a proper infrastructure for charging too which adds extra cost to the government side, they have to create it in ample quantity so that consumers would not face the shortage of charging stations.
Dr Prabhjot Kaur-Cofounder & Director Esmito said, “EV scooter market has been growing very rapidly over past few years. This growth in especially the high speed 2W vehicle category can be greatly attributed to the FAME subsidies. The reduction in subsidy is certainly unsettling to the OEMs and they need to come up with better models to offer their products at competitive prices. The brighter side is the clubbed schemes of EESL for aggregation of EVs and brining in better parity among low speed and high speed EVs offering a real selection for users. Govt is pushing the market to face reality sooner than expected, but this is the way forward now.”
The question is, after the cut down of subsidy, will consumers buy expensive electric two-wheelers and how will multiple EV companies respond to this change?
