The transport ministry is understood to have turned down the suggestions made by Niti Aayog to relax the conditions which make electric two-wheelers eligible for incentives under the FAME-II scheme, a government’s subsidy programme, sources said. The ministry is of the opinion that if the compliance norms — pertaining to minimum range, top speed and minimum acceleration — are relaxed, manufacturers will not make quality products and therefore, the demand for electric two-wheelers will not pick up, sources said. However, manufacturers are in favour of the relaxations mooted by Niti Aayog stating that prices go up significantly if the vehicle is made to meet the new conditions in order to claim the subsidy. “Hence, customers do not prefer them as they can buy an ICE engine two-wheeler at a lesser price,” an official of an electric two-wheeler manufacturers said.
In fact, the suggestions from Niti Aayog had come after several manufacturers had raised concerns over the stricter norms under the phase-2 of the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India scheme effective April 2019, which had further slowed the already poor adoption of electric vehicles. Two-wheeler makers said the conditions under the first phase — from April 2015 to March 2019 — were simpler, as they did not have tighter rules. While the second phase of the scheme entails that only models with a minimum range of 80 km and a top speed of 40 kmph are eligible for the subsidy, vehicles available in the market have a range of only about 60 km and a top speed of 25 kmph.
Other norms include a minimum acceleration of 0.65m/s and 50% localisation of content. As a result, only about 6,500 electric two-wheelers were registered and sold in the April-December 2019 period against over 75,000 units registered in the previous year. Moreover, the relief for e-bikes has been capped at Rs 10,000 for battery strength of 1 kilowatt, making them costlier, while FAME-I offered a flat Rs 20,000 for two-wheelers without any condition for the battery strength. Since vehicles currently made in India have a battery strength of 1 kilowatt, manufacturers said the same two-wheeler has become costlier by Rs 10,000.
Sohinder Gill, Director General at Society of Manufacturers of Electric Vehicles (SMEV), said, “The scheme has completely eroded the benefits for the consumers to buy electric two-wheelers. At this point, customers do not want to pay much for them.” While e-bikes with a battery capacity of less than 1 kW are priced between Rs 40,000 and Rs 60,000, those with higher battery capacity cross the Rs 1-lakh mark, making them unattractive to buyers. Electric two-wheelers account for less than 0.5% of the total vehicles sold in India as lack of charging infrastructure and high prices continue to keep consumers on the back foot. In FY19, around 1.26 lakh electric two-wheelers were sold as against 2.11 crore ICE engine two-wheelers.
Electric two-wheelers are costlier as batteries and lithium ion cells — a major component of the battery — are imported by all manufacturers, making the vehicle costlier than the global standards. Batteries account for around 50% of the total vehicle cost.
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