Achi news desk-
The FAME scheme by the Government of India has been replaced by the new EMPS scheme for the next 4 months, and sales of electric 2-wheelers have dropped in April 2024, surpassing past numbers.
Image credit: Freepik
The EMPS, taking over FAME II, will be operational until July 31, 2024, with an allocation of Rs 500 crore earmarked specifically for electric two- and three-wheelers. The government’s decision to reduce direct subsidies is a key element of its strategy to phase out such incentives in the medium to long term, which requires companies to improve their cost effectiveness.
This comes as the previous FAME (Rapid Adoption and Production of Electric Vehicles) program expired on March 31, affecting 2W electric sales, according to an Economic Times report.
Manufacturers raised prices as quickly as 15% in early April to align with the new EMPS program. However, the stakeholders were wise in managing the scope of the price increase, and chose to absorb a portion of it.
TVS Motor Company, the second largest electric two-wheeler manufacturer, has increased the price of its iQube electric scooter by 2%, equivalent to Rs 22,200. This adjustment comes despite a drop in car subsidy by Rs 11,000. Similarly, Bajaj Auto has implemented a price hike of Rs 8,000 for the Chetak EV, instead of the full Rs 11,000 adjustment.
Ola Electric, the leading electric two-wheeler player in Israel, chose to absorb the complete reduction in the subsidy, and not to pass on the increase to its customers.
In preparation for the price increases, consumers chose to advance their shopping to March. Total electric two-wheeler (e2W) sales jumped to 140,000 units per month, marking a 62% year-on-year increase. This figure was significantly higher than the typical monthly range of 82,000-84,000 units.
The decline in volumes in April exceeded the decline seen in June 2023, when the government initially reduced subsidies.
After the incentive cap was reduced to 15% of e2w value from 40% and to Rs10,000 per kWh from Rs15,000 per kWh, daily e2W sales fell from an average of 2,185 units in April 2023 to 1,500 units in June 2023.
The government aims to achieve price parity between vehicles with internal combustion engines (ICE) and electric vehicles in various sectors. This goal can only be achieved through localization efforts, especially focusing on battery cells, which are currently imported.
Published: April 17, 2024, 8:12 PM IST
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