By Dipali Banka | August 23, 2024
Dealers are stuck with unsold electric two-wheelers after the expiry of the Faster Adoption and Manufacturing of Electric Vehicles (FAME II) subsidy in March, which made EVs cheaper. The new Electric Mobility Promotion Scheme (EMPS) offers less financial support and is available to limited number of vehicles, leading to fewer buyers of electric bikes and scooters as they are now expensive.
EV two-wheeler sales saw a 17.19% decline in June according to Society of Manufacturers of Electric Vehicles (SMEV) data.
EV sales briefly surged right before the subsidy expired, as prices had increased sharply after. Following this, sales plummeted due to the absence of immediate new support, leading to significant inventory build-up for dealers, said Saharsh Damani, Chief Executive Officer (CEO) of the Federation of Automobile Dealers Association (FADA).
Top electric makers according to market share, TVS Motor declined to comment and emails sent to Ola Electric did not elicit a response.
“Our electric two- and three-wheeler businesses are both on an upswing and gaining market share. I do not see any concern on inventory level” said Dinesh Thapar, Chief Financial Officer (CFO), Bajaj Auto.
A TVS dealer in Chennai said they have been able to sell only 50% of their EV vehicle stock and as a result, have to offer discounts. The discount and EMPS subsidy have led to an increase in July sales, said FADA in a July press release. The EMPS subsidy has been extended till 30 September, which was previously expiring on 31st July.
EV adoption remains slow with expected competition and uncertain regulatory support, according to an August report by HSBC Securities and Capital Markets (India). The global brokerage firm said existing regulations should last two to three years, during which EV manufacturing costs could drop by Rs30,000-40,000, making them competitive with internal combustion engine scooters without subsidies.
At peak 2019-2020, the government was offering a total subsidy of Rs70,000 to Rs80,000. Last year, EV sales declined due to the Centre’s decision to reduce the maximum subsidy for electric two-wheelers (e2Ws) under FAME II from approximately Rs60,000 to around Rs22,500. The Fame II subsidy expired on 31st March 2024, with the introduction of Electric Mobility Promotion Scheme 2024, the subsidy was further reduced to half i.e. Rs10,000 and restricted to a limited number of vehicles.