FAME II EV subsidy reduction leads to increased prices for Ola, Ather, and Hero Vida electric scooters
Delhi : The high-level interministerial group has now received a suggestion from the Ministry of Heavy Industries that would reduce the current EV subsidy for electric two-wheelers from 40% of the total sales price to 15%. Although the government asserts that doing so will enable it to provide subsidies to a greater number of EV purchasers, doing so would also lessen the benefits that consumers obtain after purchasing an electric two-wheeler. Here is how the idea would change the advantages received by new electric scooter consumers, albeit it still has to be approved.
The ex-showroom price of an electric scooter is reduced by up to 40% under the current FAME II regulations, or Rs 15,000 per kWh of battery (limited to 2kWh). The ceiling on 15 percent of a car's worth would undoubtedly restrict how much subsidy is provided on a vehicle, even if there has been no reported adjustment to the Rs 15,000 subsidy per kWh subsidy.
Consider the Ola S1 scooter, which now costs Rs 99,999 ex-showroom and includes the advantages of the subsidy. An S1 scooter will cost Rs 1,29,999 without subsidies if we take into consideration the scooter's 40% value (Rs 39,999) and the cap at 2 kWh battery pack at Rs 15,000 in subsidies per kWh of battery. The new idea would cap subsidies at 15% of the value of the car. The price of an Ola S1 scooter that costs Rs 1,29,999,000 would increase by about Rs 19,499. As a result, the S1 base model will cost Rs 1.2 lakhs ex-showroom, including subsidies, for a mere Rs 10,000 less than it did previously.
Buyers who select more expensive choices will see a decline in the benefit ratio. For an Ather 450X Pro with a 3.7 kWh battery pack that sells for Rs 1.28 lakhs ex-showroom, including subsidies. For its 2kWh battery capacity, the current subsidy amount included in the ex-showroom price is Rs 30,000. However, if the new 15% subsidy cap is implemented, the ex-showroom value would rise to about Rs. 1.34 lakhs with an adjusted subsidy value of between Rs. 23,000 and Rs. 24,000.
The same holds true for purchasers of Hero Vida V1s who choose the top-tier Pro model, which has an on-road pricing of Rs. 1.39 lakhs ex-showroom with subsidies. The revised ex-showroom price would rise to around Rs 1.64 lakhs, with a rebate of Rs 25,000 rather than Rs 30,000.
This suggestion also signifies the tapering of the advantages that have been a significant element in promoting EV adoption over the past few years, even though no government can afford to pay subsidies eternally. Government sources cite a story in the Economic Times that states the overall budget for electric two-wheelers under the FAME II plan will be increased to Rs 3,500 crore utilising the remaining Rs 1,000 crore for electric three-wheelers. It is still unclear, though, if the increased funding will lead to a larger uptake of these electric scooters as the end user would have to fork out more money if the idea were to pass.
