Higher subsidy under FAME II to be gamechanger in adoption of EVs, say makers

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New Delhi: Electric two-wheeler makers on June 12 termed as “a phenomenal move” by the government to increase subsidy for such vehicles by 50% under the FAME II scheme saying it would be a game changer in the adoption of eco-friendly vehicles.

The government on June 11 made a partial modification of the scheme for Faster Adoption and Manufacturing of Electric Vehicles in India Phase II (FAME India Phase II), including increasing the demand incentive for electric two-wheelers to Rs 15,000 per KWh from the earlier uniform subsidy of Rs 10,000 per KWh for all EVs, including plug in hybrids and strong hybrids except buses.

In the latest modification, the department of heavy industries also capped incentives for electric two-wheelers at 40 per cent of the cost of vehicles, up from 20% earlier.

“The revision in the FAME (II) policy, increasing the subsidy by 50% per cent per KWh is a phenomenal move. Sales of electric two-wheelers have grown despite the pandemic and with this additional subsidy, we expect electric two wheeler sales to disrupt the market, and clock 6 million-plus units by 2025,” Ather Energy CEO and co-founder Tarun Mehta said in a statement.

The government’s continued support to drive adoption of EVs, with a keen focus on locally built electric two-wheelers will make India the manufacturing hub of EVs, he added.

Welcoming the “government’s continued support to EVs”, TVS Motor Company Joint Managing Director Sudarshan Venu said: “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.”

Expressing similar views, Society of Manufacturers of Electric Vehicles (SMEV) Director General Sohinder Gill said: “It’s an important and an admirable decision taken by the government, a move that will bring down the prices of electric two wheelers nearer to the IC (internal combustion engine) vehicles and remove one of the biggest blockade of the high sticker price of electric two-wheelers.”

Elaborating further, he said a ‘city speed electric scooter’ with a range of 100km/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 for electric two-wheelers,” Gill said.

He further said, “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 per cent of the two-wheeler market becoming electric in five years.” Hero Electric Managing Director Naveen Munjal said the government’s step ‘will be seen as one of the most significant moves in the last decade for the electric vehicles industry’ and the increase in subsidy under FAME II will usher in a new era of electric mobility in India.

“The increase in the cap of subsidies for EVs will be a game changer driving consumers towards electric scooters even as petrol prices continue to touch the Rs 100 mark,” he added.

Likewise, Revolt Motors Founder Rahul Sharma said the “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 the government’s commitment and intent for the EV industry,” he added.

Welcoming the step, Okinawa Autotech Managing Director & Founder Jeetender Sharma said,”The government of India’s revisions to FAME-II subsidies is a welcome step that will only add zeal to the adoption of electric vehicles. Lowering the prices of electric scooters in the country will really help to persuade more riders to switch from a combustion-engined model to an electric one, he added.

Stressing that the industry has always emphasised on the importance of creating an ecosystem for electric mobility, Sharma said, “This new revision to the FAME II scheme is an important step in that direction.”

Mehta said Ather Energy already has plans to expand distribution to 30 cities in the next six months and “this increased subsidy will help accelerate consumer demand, immensely”.

Sharma also said Revolt plans to reopen booking and further expand into newer markets.

“Such interventions (hike in subsidy) coupled with the ongoing focus on infrastructure development can accelerate the growth of the sector immensely,” he added.