It took 45 days in 2023 for electric two-wheelers (E2Ws) to cross 1 lakh units in sales compared to nearly 80 days in 2022. Leading the sales chart is Ola Electric, which had sold 28,000 units this year till February 15, as per data available on the Vahan portal of the Ministry of Road Transport and Highways.
In a recent blog post, Bhavish Aggarwal, Founder and CEO, Ola Electric, had said, “2022 will be remembered as the year India’s electric vehicle (EV) revolution truly took off. From just 4,000 units a month in June 2021, the monthly run rate reached 80,000 units towards the end of 2022, a 20x growth! From less than 1 percent penetration in 2021, to almost 6 percent in just a year, the EV revolution in India has not only been restricted to the urban centres, but is proving to be a pan India phenomenon!”
Ather Energy, which sold 15,284 units (9,212 units in January and 6,072 units in February) in the first 45 days of the year, also holds a similar view. Ravneet Phokela, Chief Business Officer of the company, stated, “E2Ws are bought more like an upgrade option than from a TCO (Total Cost of Operations) standpoint. A section of buyers has realised that buying an electric scooter is the ultimate way forward.”
What’s fuelling the rise?
Auto industry analysts reckon that launches, affordable products, improved infrastructure, production ramp-ups, rising consumer confidence, etc., are behind the rise in E2W sales over last year.
As Mitul Shah, Head of Research, Institutional Equity, Reliance Securities, puts it, “New players have emerged with new models and existing players such as TVS, Ola, etc., have ramped up their capacities. Apart from the reduction in fire incidents, there have been improvements in product, technology, safety features etc. Also, consumer confidence is rising in EVs due to the sharp decline in fire incidents. All these factors have resulted in higher retail sales on a year-on-year (YoY) basis.
SMEV unimpressed
However, EV industry body Society of Manufacturers of Electric Vehicles (SMEV) feels the numbers for this year are underwhelming and could have been much higher.
Vahan Data show that E2W registrations during the festive months stood at 77,090 units in October 2022 and 76,674 units in November, and thereafter dropped to 64,553 units in December and 64,500 units this January (non-festive season months).
SMEV, which was targeting 10 lakh units this fiscal year, in line with projections by NITI Aayog, claimed that the number will touch 7.5 lakh units, well short of the target.
Subsidy subterfuge
In SMEV’s view, there has been a drop in month-on-month E2W numbers primarily because subsidies worth Rs 1,200 crore have been withheld against the claims submitted by the firms. However, Ola and Ather officials, on condition of anonymity, have stated that only companies that have not been adhering to the Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicles in India (FAME) guidelines have witnessed a slide in sales.
Among other things, the FAME scheme stipulates that 50 percent of the total value added to an EV should be done locally by EV companies in order to avail of the subsidy.
It was reported in the media earlier that the Ministry of Heavy Industries has blocked subsidy disbursals to 12 companies amid allegations of misappropriation of funds under the FAME scheme.
SMEV claims that sales have declined largely because prices of certain companies’ EVs have surged because of the withdrawal of subsidies. For instance, overall sales in November were impacted by the decline in Okinawa’s sales.
“Although the demand for E2Ws is there, there is no adequate working capital to keep businesses running. Though e-scooter customers have availed of the subsidy benefit when the vehicle was bought by them, the amount has not been compensated by the government,” said SMEV Director General Sohinder Gill.
However, he clarified that there will be no immediate impact on the volumes of E2W manufacturers, which have been on the government’s radar for false subsidy claims worth Rs 300 crore.
According to a report in The Economic Times, Ola Electric, Ather Energy, TVS Motor and Vida are being probed for allegedly mispricing their E2Ws to make them eligible for the FAME2 scheme. The report also claimed that the aforementioned companies had kept the prices of their products low to claim the subsidy.
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