Electric two-wheeler sales cross 1 lakh mark in May as subsidy cut sparks buying rush

Ather electric scooter

The domestic electric two-wheeler (E2W) industry saw monthly sales cross the one lakh mark for the first time in May as the announcement of a subsidy cut on such vehicle purchases sparked a last-minute buying rush.

As per the data available on the government portal Vahan, retail monthly sales of electric two-wheelers scaled a new high of 104,845 units in May 2023, which is about 57 percent higher than the 66,727 units registered in April 2023. See table below:

On a year-on-year (YoY) basis, E2W registrations were up by  147 percent percent from 42,415 units sold in May 2022.

According to industry players, the record numbers were largely due to buyers advancing purchases in the last 10 days of May as E2W manufacturers indicated that there will be a price mark-up post the subsidy cut.

Anticipating a 15-20 percent price hike in June, buyers booked vehicles at lower prices with a larger FAME-II subsidy.

In April, the numbers had declined by nearly 23 percent over issues related to delays in subsidy disbursement and supply shortage.

It is to be mentioned that Vahan only records the total number of vehicles which have been registered (post-sales) and doesn’t include booked ones. It also doesn’t take into account low-speed E2W sales and excludes data for Lakshadweep, Madhya Pradesh and Telangana, which means the sales in May must be higher.

The subsidy cut

On May 21, the government notified that the subsidy on the FAME India (Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India) Scheme will be revised to Rs 10,000 per kilowatt per hour (kWh) as against Rs 15,000/ kWH starting June 1. (l) Furthermore, the cap for incentive has been brought down to 15 percent of the ex-factory price of the model as against 40 percent offered earlier.

The May 2023 numbers top the previous best of 86,269 units logged in March 2023 by 19,303 units, as per the data available on Vahan. The total numbers of E2Ws registered were 64,664 units in January and 66,057 units in February.

OEMs shatter records

The record sales were largely underpinned by the all-time high monthly volumes of the top three OEMs – Ola Electric, TVS Motor Co and Ather Energy.

Ola Electric continued to maintain the leading position as it sold 28,469 units of e-scooters in May 2023, which is nearly 30 percent higher than the 21,991 units sold a month before, as per Vahan data. In a statement, the company claimed that it has sold over 35,000 units in May, capturing a market share of over 30 percent, posting a YoY growth of 300 percent.

Bhavish Aggarwal, Founder and CEO, Ola Electric, said, “Month after month, our sales have experienced exponential growth and Ola has consistently led the EV revolution in India.”

TVS Motor Company, which crossed 20,000 units of monthly sales for the first time, was in the second spot. The company sold 20,262 units of iQube, surpassing its previous best of 17,878 units in March 2023 and recording a 131 percent MoM growth over 8,751 units sold in April 2023.

“TVS iQube has a healthy booking pipeline of over 30,000 units and we are confident of continued improvement of supplies in the coming months, the company said in a statement.

Ather Energy, which reached the third spot, also hit a new monthly high in May 2023. At 15,266 units, its sales in May were nearly 100 percent more than April’s 7,786 units. In a statement, the company claimed it grew by 357 percent on a YoY basis.

Ravneet Singh Phokela, Chief Business Officer of Ather Energy, said, "The market gained strong momentum this month, which can be attributed to the growing underlying demand, fuelled further by the news of the impending revision of the FAME subsidy. This led to some consumers bringing forward their purchases, in order to avail the higher subsidy amount. We hope to maintain this momentum as the manufacturing industry and its ecosystem continue to grow.”

While Bajaj Auto rose to fourth place for the first time with a 168 percent month-on-month increase in sales to 9,931 units, Ampere Vehicles took fifth position with 9,632 units, up 15 percent over April’s 8,324 units.

Price hikes implemented

With reduced FAME II subsidy reduced, OEMs like Ola, Ather, TVS, etc., have already jacked up the prices of e-scooters and e-motorcycles by 10 percent to 15 percent.

Industry analysts reckon that there will be some near-term impact on sales in the next few months but the market is expected to bounce back during the onset of the festive season. Furthermore, new launches like Ola S1 Air, Ather 450S, TVS iQube ST, a new variant of Bajaj Chetak, etc., may prop up some volumes, as indicated by companies.