Ola, Ather, Matter Two-Wheelers in India to Get Pricier as FAME II Subsidies Decrease
Concerns Arise Over the Impact of Reduced Subsidies on Electric Vehicle Adoption in India
1 June 2023
Electric two-wheelers in India to become more expensive from June 1, 2023, due to a reduction in FAME II subsidies.
Ola Electric, Matter, and Ather Energy have already increased the prices of their electric scooters in response to the subsidy cuts.
Subsidy reduction aims to promote shared mobility vehicles and create a level playing field for all players in the market.
Starting from June 1, 2023, electric two-wheelers in India are likely to become more expensive as manufacturers resort to price hikes due to the reduction in FAME II subsidies. Ola Electric, Matter, and Ather Energy have already increased the prices of their electric scooters in response to the subsidy cuts announced by the Ministry of Heavy Industries (MHI). This decision has sparked mixed reactions from industry experts, manufacturers, and potential buyers.
The Ministry of Heavy Industries announced a significant reduction in subsidies provided under the FAME II program, targeting electric two-wheelers. Previously, the maximum subsidy cap was 40% of the ex-factory price, but it has now been reduced to 15%. This sudden reduction has raised concerns about the potential decline in electric vehicle (EV) adoption and its impact on the industry as a whole. Industry experts believe that a gradual transition with sustained subsidies would have been more beneficial for market growth.
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The price sensitivity of the Indian market poses a challenge to the increased cost of EVs. Sohinder Singh Gill, CEO of Hero Electric, expressed concerns about consumers being reluctant to spend more than Rs 1.5 lakh to switch to an electric scooter. Gill emphasized the importance of affordability in driving the widespread adoption of electric vehicles and stated that Hero Electric would not increase prices to promote the adoption of electric two-wheelers.
Sources familiar with the Ministry of Heavy Industries' internal discussions revealed that the subsidy reduction aimed to broaden the distribution of subsidies for shared mobility vehicles and extend them to a broader spectrum of players. This decision reflects the government's focus on promoting electric mobility beyond well-established manufacturers and creating a level playing field for all players in the market.
Ola Electric, Matter, and Ather Energy have already announced price hikes for their electric scooters in response to the subsidy cuts. Ola Electric increased the prices of its S1 and S1 Pro models by Rs 15,000 each, while Matter raised the prices of its vehicles by Rs 30,000. Ather Energy has also adjusted the prices of its EV scooters. However, Hero Electric has chosen not to increase prices, prioritizing affordability and dispelling misconceptions about the cost of EV ownership.