Made-in-India Electric Two-Wheelers Set To Become More Affordable After Govt. Revises FAME-II Subsidies

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Apart from the manufacturers themselves and potential EV buyers, the Government of India is giving the electric revolution a much-needed boost too. The ongoing FAME-II scheme aims at providing subsidies to electric vehicle manufacturers and that further assists them in reducing the prices of their products. The Ministry of Heavy Industry has now rolled out some crucial amendments for the FAME-II scheme and the earlier subsidy rate for electric two-wheelers of  Rs 10,000/kWh has now been pushed further to Rs 15,000/kWh.

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The intent is clear- the government is planning to make India an electric vehicle nation by 2030 by helping the adoption of EVs.

Simple energy electric scooter

The amendments made have also ensured that cap on electric two-wheeler incentives will be up to 40 per cent of the vehicle cost. The central government will also procure electric buses and three-wheelers on a large scale.  There’s an important catch in this scheme though. Not all the electric two-wheelers are eligible for the subsidy. In fact, around 95% of the electric scooters in India are not eligible for the FAME-II subsidy. And that is because the scheme requires the electric scooters to deliver a minimum range of 80 kms on a single charge and must have a top speed of at least 40 kmph to qualify for the subsidy. According to FAME-II norms, only the high-speed electric scooters powered by higher than 250 watt electric motor and have a top speed of above 25 kmph, are eligible for the FAME-II subsidy.

How did the industry react?

Ather Energy was among the front-runners to pass on the incentive to its customers as it announced that Ather 450X will now cost ₹14,500 less after FAME II subsidy revision. It said, “We’ll announce on-road prices and any other necessary information over the next few days. Website will be updated later to reflect all this information.”

Ather 450X deliveries (1)

Tarun Mehta, CEO and co-founder Ather Energy: “The revision in the FAME policy, increasing the subsidy by 50% 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 over 6 million units by 2025. Ather Energy already has plans to expand distribution to 30 cities in the next 6 months and this increased subsidy will help accelerate consumer demand, immensely. 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.”

Revolt RV 400

Rahul Sharma, founder, Revolt Motors: “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 very 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.”

Simple energy electric scooter rear and front

Suhas Rajkumar, founder and CEO, Simple Energy: “The increase in the subsidy is very exciting and positive news for the electric two-wheeler industry. Manufacturers like us will benefit as this move will significantly improve the unit economics and accelerate the EV adaption as it becomes much more affordable. This will be the right push for the industry which is still considered to be at a nascent stage. Our pricing would also be affordable as the announcement has come in right before the launch of our flagship product (Simple Energy Mark 2) on August 15, this year.”

Okinawa Ipraise+

Jeetender Sharma, MD and founder, Okinawa Autotech: “The E2W industry is once again experiencing a positive sentiment and a high level of interest from the government of India. 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. We have always emphasised the importance of creating an ecosystem for EV mobility, and this new revision to the FAME II scheme is an important step in that direction.”

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