Economy

‘Higher incentives under FAME II will be a game-changer in EV adoption’

Our Bureau Bengaluru | Updated on June 13, 2021

Govt hiked the demand incentive for electric two-wheelers to ₹15,000 per kWh from the earlier subsidy of ₹10,000

Electric two-wheeler manufacturers have termed the government’s decision to increase subsidy for electric vehicles by 50 per cent under the FAME II scheme as extremely encouraging and a big boost to the industry.

The government on Friday modified the scheme for Faster Adoption and Manufacturing of Electric Vehicles in India Phase II (FAME India Phase II), increasing the demand incentive for electric two-wheelers to ₹15,000 per kWh from the earlier subsidy of ₹10,000 per KWh for all EVs. The heavy industries ministry has also capped incentives for electric two-wheelers at 40 per cent of the cost of the vehicles from 20 per cent earlier.

Sudarshan Venu, Joint Managing Director, TVS Motor Company, said that the government’s move was extremely encouraging. “We welcome the government’s continued support to EVs. Sustainable mobility solutions are very important for the future and TVS is investing significantly behind this. The improved incentives for electric two-wheelers will increase penetration. Such policy direction should lead to the indigenous development of future technology,” Sudarshan Venu said.

Price cut likely

Electric two-wheeler start-up Ather Energy termed the government move as phenomenal. “It will reduce the gap in pricing between a gasoline-based two-wheeler and electric vehicles,” Ather Energy’s CEO Tarun Mehta told BusinessLine. He said the tweaking of the policy will help reduce the price of the electric two-wheelers by around ₹15,000.

He further said that such incentives change the dynamic of the market completely.

“The customers’ shift towards buying electric vehicles will be faster now as the total ownership cost of such vehicles is much lesser than the petrol-based vehicles.”

Makers gung-ho

“The sales of electric two-wheelers have grown despite the pandemic. With this additional subsidy, we expect it to disrupt the market,” he said. Mehta said once the lockdown restrictions are eased, the pent-up demand will gallop which will lead to a spurt in sales. Customers will now look at buying an electric scooter as their first choice compared with what it was earlier, he pointed out. The five-year projected figure will now be achieved in three years, he said.

Suhas Rajkumar, Founder and CEO of electric two-wheeler start-up Simple Energy, said, the increase in the subsidy is very exciting and positive news for the two-wheeler EV industry. “Manufacturers like us will benefit as this move will significantly improve the unit economics and accelerate the EV adaptation as it becomes much more affordable.” He pointed out that this decision will be the right push for the industry which is still considered to be at a nascent stage. The start-up will be launching its flagship product (Simple Energy Mark 2) on August 15 this year.”

Bhavish Aggarwal, Chairman and Group CEO, Ola, said: the incentive of ₹15,000 per KWH will help make electric two 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,” Aggarwal said.

“Our Ola Futurefactory will be coming online soon and we will be aggressively pricing our products. With yesterday’s policy incentives, we will be able to accelerate the global transition to sustainable mobility even faster.”

Published on June 12, 2021

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