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With subsidy norms getting more stringent and a reduction in subsidies starting June 1, the electric two-wheeler sector witnessed a year-on-year dip in investments and a reduction in registrations of E-two-wheelers.
According to data sourced by businessline from Tracxn, a market intelligence and analytics platform, The electric two-wheeler industry received an investment of $427 million so far in 2023, compared to $796 million in investments during the dame period in 2022.
The overall round of funding deals in the industry also reduced year-on-year from January to June, with 26 in 2022 and only 13 in 2023 during the same period.
“Funding for EV 2W start-ups grew significantly in 2022, going up by 60.7 per cent. The growth can be primarily attributed to factors like favourable government policies, including the FAME scheme, under which the government offers tax reimbursement and subsidies for buyers and support for establishing charging infrastructure,” said Neha Singh, Co-Founder of Tracxn.
As electric two-wheeler demand rises in smaller cities, funding in the electric vehicle ecosystem, including battery charging infrastructure, could see an uptick.
“Electric vehicle penetration is still low, with demand in tier 2 and tier 3 cities rising. We expect that investments will continue to increase in the future in the electric 2W segment,” added Singh.
EV Two-wheeler sales dip
The sales of electric vehicles crossed one million units in FY23, with 62 per cent of sales being electric two-wheelers. However, the registrations of electric vehicles dropped from 1,05,122 in May to 32,488 in June, according to Vahan data, primarily due to the slashing of the FAME subsidy, resulting in price increases by Original Equipment Manufacturers (OEM).
“There could be a 10 to 15 per cent decrease in the sales of electric two-wheelers over the next three months. The new price structure will take time to set in. A consumer purchasing an electric vehicle is overall not a first-time vehicle purchaser and will not have a major impact with the subsidy reduction,” said Manish Raj Singhania, President of the Federation of Automobile Dealers Association (FADA), to businessline.
Electric two-wheeler registration data, according to Vahan Dashboard
| January | 64,538 |
|---|---|
| February | 65,935 |
| March | 86,249 |
| April | 66,777 |
| May | 1,05,122 |
| June | 32,488 |
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