Electric two/three-wheeler manufacturers are sitting on a stockpile of unsold vehicles for which they will not be able to claim subsidy under Faster Adoption & Manufacturing of Electric Vehicles (FAME) II, which is expiring on March 31. They have offered heavy discounts in the hope of exhausting their inventories before the March 31 deadline.

Also read: Tatas to list electric vehicles business 

To make matters worse, there were clear signals in a recent meeting of the Original Equipment Manufacturers (OEMs) with the Ministry of Heavy Industries (MHI) that neither is the FAME II scheme being extended nor is there any decision yet on FAME III.

Unsold vehicles

Multiple sources told businessline that there are unsold vehicles lying in the warehouses and some are in transit. The payment of subsidy is only for vehicles sold. If they do not sell the vehicles by March 31, the OEMs will have to bear the losses. In any case, payments for March will not arrive until June.

In the MHI meeting on February 20, leading manufacturers including Hero MotoCorp, Ather Energy, Bajaj Auto, TVS Motor Company, Ola Electric, and Mahindra & Mahindra conveyed their concerns to the government officials. “It has very clear that there will be no extension of the FAME-II scheme,” sources told businessline. The meeting was chaired by Hanif Qureshi, Additional Secretary, MHI.

“Concerns were shared. There is an inventory of at least 15 days at present and the FAME-II certificates are expiring on March 31. Government has given a clarity that FAME-II will not be extended, but not announcing any retrospective also for the present vehicles which are being sold to customers,” a source privy of the meeting told businessline.

Desperate to clear their inventories, companies have announced huge discounts on their electric two-wheelers.

For instance, Bengaluru-based Bounce Infinity and Ola Electric cut the prices of their products by ₹24,000 and ₹25,000 respectively, in the last two weeks.

Allocation reduced

Sources said the government has ₹1,500 crore right now for disbursal from the revised estimate of nearly ₹4,807 crore allocated in FY24 for FAME schemes. The government has reduced the allocation by around 44 per cent to ₹2,671 crore for FY25. According to analysts, because of this cut, a slowdown is expected in the adoption of EVs in India in FY25. Last year too, the government slashed the incentive from ₹15,000 per kWh of battery to ₹10,000 per KWh from June 1, 2023.

Also read: BYD India plans to retain the top brand tag in the luxury electric car market

“FAME subsidy is likely going to end on March 31. While the subsidy should be incentive enough for customers, OEMs are throwing in some more discounts to swing the fence sitters over. Also, dealer stock that may have to be liquidated,” Amitabh Saran, Founder & CEO, Altigreen, told businessline.