Electric two-wheelers to become cheaper in India with key FAME II subsidy revisions

Amaan AhmedJun 12, 2021 18:48:24 IST

In what comes as a major fillip to the electric two-wheeler industry in India, the Department of Heavy Industry (DHI) has made vital revisions to the Faster Adoption and Manufacturing of (Hybrid) and Electric Vehicles II (FAME II) scheme that will lower prices of electric scooters and motorcycles in the country and convince more riders to make the switch from a combustion-engined model to an electric one. In a notification issued late Friday, the DHI said the incentive for e-two-wheelers is being hiked from the current Rs 10,000 per kWh to Rs 15,000 per kWh.

While that may seem like a nominal increase, another point mentioned in the notification makes this move even more significant. The limit on the incentives for an e-two-wheeler is now capped at 40 percent of its price, twice the previous limit of 20 percent. What this means, is that an e-two-wheeler with a 1 kWh battery will receive an incentive of Rs 15,000; one with a 2 kWh battery will be eligible for a Rs 30,000 incentive while one with a 3 kWh battery pack will be eligible for an incentive of at least Rs 45,000 (as long as its ex-factory cost is over Rs 1 lakh and below Rs 1.5 lakh). This move will result in prices of all e-two-wheelers being slashed by a considerable margin.

Ather Energy has announced a price drop of Rs 14,500 for the Ather 450X. Image: Ather Energy

Shortly after the notification was issued, electric scooter manufacturer Ather Energy shared a tweet confirming the Ather 450X’s price will drop by a further Rs 14,500, which would bring its price down to Rs 1,44,500, as the company is passing on the full benefit to the buyers.

Govt of India doubles down on its commitment towards #goingelectric. Subsidy for electric 2W increases under #FAME2 incentives.

Which means a whopping ₹14,500 additional subsidy on the #ATHER450X. Haven't booked it yet? Now seems like a good time: https://t.co/HNCOb2bGc9 pic.twitter.com/t2qD3c5Qq6

— Ather Energy (@atherenergy) June 11, 2021

In total, the Ather 450X is eligible for a Rs 43,500 incentive under the revised FAME II scheme, and a similar incentive should also be available to the Ather 450 Plus, which would bring its price down to Rs 1,25,500 (all prices ex-showroom, Bengaluru). Prices of other existing electric scooters and motorcycles – including ones from mainstream manufacturers such as the Bajaj Chetak, TVS iQube, Revolt RV300/RV400 and those from the likes of Hero Electric, Okinawa and more – will also witness a substantial drop soon.

Till date, over 76,000 EVs have availed benefits under Phase II of the FAME India scheme, nearly 59,000 of which are electric two-wheelers; with the increase in incentives, the authorities have clearly decided to give this segment a stronger push to accelerate EV adoption in the country. This revision will also help electric two-wheeler manufacturers roll out more affordable models with bigger batteries in the time to come.

In a tweet ostensibly commenting on this development, Tarun Mehta, co-founder at Ather Energy, called the move a ‘demonetisation moment for the EV industry’.

Freaking demonetization moment for the EV industry ⚡️🚀🚀🚀

— Tarun Mehta (@tarunsmehta) June 11, 2021

Early on Saturday, Rahul Sharma, founder of homegrown e-two-wheeler manufacturer Revolt Motors, termed the revision a ‘game changer’ of a move, and also mentioned the company is set to reopen bookings for its e-motorcycles soon.

“The recently announced modification in the FAME India Phase 2 scheme will prove to be a game changer. The increase in financial incentive will further help in boosting adoption of products in the category and is a reinforcement of government’s commitment and intent for the EV industry. We are pleased with this development as Revolt plans to reopen booking and further expand into newer markets. Such interventions coupled with the ongoing focus on infrastructure development can accelerate the growth of the sector immensely”, said Sharma.

Sudarshan Venu, Joint Managing Director, TVS Motor Company, believes the increase in incentives for electric two-wheelers will result in more motorists switching over from petrol-powered models.

“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 indigenous development of future technology”, said Venu.

Weighing in on the topic, Sohinder Gill, Director General, Society of Manufacturers of Electric Vehicles (SMEV), said, “It’s an important and admirable decision taken by the government, a move that will bring down the prices of electric two-wheelers nearer to the IC vehicles and remove one of the biggest blockades of the high sticker price of electric two-wheelers. A City Speed electric scooter with a range of 100 km/charge will now cost less than Rs 60,000 and a high-speed scooter with a range of 80 km will come nearer to the price tag of Rs.1 lakh. Together with the other important factors like extremely low running cost, low maintenance and zero emission, such price levels will surely spur a substantial demand of electric two wheelers. We believe the time has come for mass adoption of electric two wheelers and such initiatives coupled with a mass awareness campaign by the government and easy terms financing by public sector banks will bring us closer to the target of 30 percent of the two-wheeler market becoming electric in five years.

India’s electric two-wheeler market is rapidly gaining pace, and more players are set to enter the fray soon. Ola Electric’s first e-scooter is due for launch in the coming months, and Hero MotoCorp has partnered with Taiwan’s Gogoro to develop a battery swapping network for electric two-wheelers in India, as the world’s biggest two-wheeler manufacturer gears up to enter the electric scooter segment in 2022.