FAME II subsidy impact: Ola, Ather increase prices, others E2W players expected to follow

Ather Energy is expected to revise prices later on June 1.

With the lowering of subsidies on electric two-wheelers (E2Ws) under the second phase of the Faster Adoption of Manufacturing of Electric Vehicles in India (FAME-II) scheme, firms like Ola Electric, Ather Energy, Okaya EV, Ampere EV, TVS Motor Company and Matter Energy have begun increasing the prices of their vehicles.

The FAME-II subsidy scheme for which the government had earmarked Rs 10,000 crore for three years was introduced on April 1, 2019. The subsidised amount is now revised to Rs 10,000 per kWh (from Rs 15,000) with a maximum cap of 15 per cent (from 20 per cent) of the ex-factory price, as per the latest notification.

Market leader Ola Electric has hiked the prices across its S1 range of products by Rs 15,000. The Ola S1 is now priced at Rs 1,29,999 and S1 Pro at Rs 1,39,999. The cheapest model in its portfolio - S1 Air - will now cost Rs 99,999.

Ahmedabad-based EV startup Matter Energy said it will increase the prices of its electric bikes by Rs 30,000 from June 6.

Ather Energy has also revised the prices of its 450X scooter by Rs 8,000 with effect from June 1.  As a result, its e-scooter 450X (with Pro Pack) will be available at Rs 1,65,000 (ex-showroom Bengaluru).

Ravneet S. Phokela, Chief Business Officer of Ather Energy, said that the FAME II revision has resulted in a subsidy reduction of around Rs 32,000 and the company is absorbing a “huge chunk” of this price impact for its customers with a view to “quicken EV adoption” in the country.

“We have tried to contain the prices as much as possible in the interest of our customers and have registered the lowest price hike in the industry post the FAME II subsidy reduction,” said Phokela in a statement.

TVS Motor has raised the price of its iQube E2W range by Rs 17,000-22,000 depending on the variant.

Manu Saxena, Senior Vice-President, electric vehicles, at TVS Motor, said in a press note that the specifics and further details on this will be available on its website soon.

Greaves Cotton-owned Ampere EV has also increased the prices of its products by Rs 21,000-39,100. Okaya EV has increased its vehicle price from Rs 15,900 to 25,900 across its range.

Hero Electric and Okinawa Autotech are the only companies that have decided not to increase the prices of its e-scooter models.

While none of the E2W players shared the impact of the price revisions, industry observers said that there will be a marginal impact on sales growth in the next two to three months.

As per CRISIL, the price increase could be in the range of Rs 20,000 to Rs 25,000 for a vehicle priced at Rs 1.5 lakh.  The ratings agency claimed that the volumes would be “under pressure” for about “three to four months”.

“The amount of money that customers used to pay as a downpayment and will now is different. Because of this differential in subsidy, it will typically be in the range of Rs 20,000-25,000 for a 3 kWh kind of battery size. You will see that customers will shell out Rs 4,000-5,000 extra as a downpayment,” said Hemal Thakkar, director, consulting, CRISIL Market Intelligence and Analytics. He added, “For consumers, the down payment will increase and the EMI too will go up to a certain extent because the prices of vehicles will rise as subsidy goes down.”