Government raises incentives on electric two-wheelers, model prices to come down  

(Image: Ather Energy)

Following a weak response to the subsidy scheme that aimed at pushing sales of electric two-wheelers, the government has increased demand incentives on such vehicles.

As per the latest modification done in the scheme of Faster Adoption and Manufacturing of Electric Vehicles in India Phase II (FAME India Phase II), demand incentive has been raised to Rs 15,000 per KWh from Rs 10,000 per KWh for electric two-wheelers.

Likewise, the cap on incentives for electric two-wheelers has been raised to 40 percent of the cost of the vehicle. Before this modification, the cap stood at 20 percent, as per the initial notification of the FAME India Phase II done in early 2019.

Bengaluru-based Ather Energy said as a result of the increase in incentives, the Ather 450X will get an additional subsidy of Rs 14,500.

Only 3 percent of the 1 million electric two-wheelers targeted by the government under the FAME India Phase II scheme launched in 2019 were sold till December 2020, as per data shared by the Society of Manufacturers of Electric Vehicles (SMEV).

Read: Is the Indian two-wheeler industry heading towards a new disruption?

By the end of December 2020, only 31,813 electric two-wheelers were sold since the start of the scheme. Sales of high-speed electric two-wheelers during the January-December period stood at 25,735, a fall of 5 percent as against 27,224 units sold in 2019.

“I welcome the government’s amendment to the FAME II subsidy. The incentive of Rs.15,000 per KWH will help make electric 2 wheelers affordable for many more consumers. I believe India has the potential to lead the world in sustainable mobility and become a big market as well as a global EV manufacturing hub.

"Our Ola Futurefactory will be coming online soon and we will be aggressively pricing our range of electric scooters. With yesterday’s policy incentives, we will be able to accelerate the global transition to sustainable mobility even faster,” said Bhavish Aggarwal, Chairman and Group CEO, Ola.

The scheme could not attract customers to shift from petrol bikes to electric two-wheelers, mainly because of the preconditions and qualification criteria of FAME 2, which made such vehicles unaffordable to the mass market customer despite the subsidy.

In order to qualify for the FAME 2 benefits, an electric two-wheeler needs to have a minimum drive range of 80km, a maximum speed of 40 km/hr and energy consumption of 8 units for a full charge. In addition, localised content in the vehicle should be 75 percent.

From the estimated Rs 10,000 crore to be spent on FAME 2, just about Rs 500 crore is believed to have been spent.

Besides two-wheelers, the government targeted accelerated adoption of electric three-wheelers for environment-friendly public transportation. While 2019 saw robust growth in demand for electric three-wheelers, the pandemic of 2020 reversed that trend.

However, taking cognisance of this slump the government has decided aggregate demand for 300,000 electric three-wheelers for multiple user segments through the state-owned Energy Efficiency Services (EESL).

“The aggregation will be the key method for bringing the upfront cost of three-wheeler electric vehicles at an affordable level and at par with internal combustion three-wheelers,” the amendment to the notification added.