Economy

New FAME-II rules to impact e-scooter manufacturers the most

Our Bureau Hyderabad | Updated on April 07, 2019 Published on April 07, 2019

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Govt notifies new eligibility criteria for obtaining incentives

More than 95 per cent of the electric two-wheeler models being produced now won’t be eligible for incentives under the new scheme announced by the Ministry of Heavy Industry and Public Enterprise.

Called Faster Adoption and Manufacturing of Hybrid and Electric Vehicles in India or FAME-II rules, the Ministry, through a notification on March 28, had laid out the eligibility criteria for electric buses, passenger vehicles, three- and two-wheelers to get the incentives.

According to CRISIL Research, the electric two-wheeler segment will be the most impacted by the new rules as manufacturers may need to scramble to conform with stringent FAME-II, unless the government helps out by diluting the norms.

The criteria is based on minimum top speed, minimum range per charge, minimum acceleration and energy consumption efficiency of EVs. The new rules also mandated that all EVs, except e-rickshaws and e-carts, should have regenerative braking capability to be eligible for incentive.

The outlay of ₹895 crore for FAME-I has been increased ten-fold to ₹10,000 crore in FAME-II, which will be implemented in 3 years starting April 1, and will be applicable to vehicles with ‘advanced batteries’ (excluding lead acid ones).

Read More:FAME II can save 5.4 mt oil: NITI Aayog report

About 90 per cent of the vehicles that availed of incentives under the previous FAME I scheme, which was operational between April 1, 2015, and March 31, 2019, were electric scooters.

Under FAME-I, incentive was provided to all battery-powered vehicles, including those that run on lead acid batteries.

Until September 2018, about 90 per cent of the beneficiaries under FAME-I were lead acid powered electric scooters.

Such electric scooters were priced below ₹50,000 (after including the FAME-I incentive of ₹9,000), while lithium- ion battery-driven scooters, which costs ₹70,000 after incentive, and many internal combustion engine scooters are more expensive. Because of their lower upfront cost, detachable batteries (limiting need for public charging infrastructure) and inherent cost benefits of EVs led to a pick-up in e-scooter sales to 55,000 units in fiscal 2018, according to Society of Manufacturers of Electric Vehicles (SMEV) data. However, from October 2018, demand incentive to lead acid battery-based vehicles was discontinued under FAME-I, which comes as a big blow to electric scooter sales.

“Earlier, the incentive for lithium ion battery-based 2-wheelers stood at ₹17,000 or ₹22,000, based on the fuel savings potential and irrespective of the size of the battery. FAME-II has linked the demand incentive to the size of the battery, with the government providing ₹10,000 per kWh of battery used for a 2-wheeler. As the average size of a lithium ion battery in electric scooters sold during FAME-I was 1.5kWh (average subsidy of ₹15,000 per vehicle), it reduced the average subsidy per vehicle by ₹2,000 to ₹7,000,”said CRISIL.

Published on April 07, 2019
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