FAME-II: Stricter norms lead to slump of electric vehicle sales in H1

Besides, 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.

By: | Updated: October 29, 2019 7:29 AM

Representational ImageHit by stringent compliance norms, only around 3,000 electric two-wheelers were registered and sold under the government's subsidy programme – FAME-II scheme – in the first six months (April-September) against over 75,000 units registered last year, people aware of the matter said.

The development, experts said, is due to much stricter norms under the phase-2 of the scheme rolled out by the government effective April this year, further slamming brakes on the already poor adoption of electric vehicles. The conditions under the first phase – from April 2015 to March 2019 – were simpler, as it did not have tighter rules pertaining to minimum range, top speed and minimum acceleration.

Besides, 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 the 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 prices go up significantly if the vehicle is made to meet the new conditions. “A much higher battery capacity is required to meet the requirements and claim the subsidy, which raises price significantly, making it unviable for the customers,” Gill told FE, adding that the scheme was a total failure as the whole purpose of the government of electrifying mobility due to environmental concerns remains unsolved.

In FY19, around 1.26 lakh electric two-wheelers were sold, out of which around 75,000 were registered under the subsidy programme, data compiled by SMEV showed. “Since April 2019, when the second phase got implemented, only around 3,000 units were sold under the scheme, further denting sales which were already low,” Gill said.

As per the new norms, only models with a minimum range of 80 km and a top speed of 40 kmph are eligible for the subsidy, while the 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, which was not there earlier, and 50% localisation of content in the vehicles. Manufacturers said it is difficult to maintain as companies have to import several components, in addition to lithium-ion batteries and electric motors used in electric vehicles.

Experts said that many small manufacturers are making sub-standard products with poor range. While e-scooters with a battery capacity of less than 1 kw are priced between Rs 40,000 and Rs 60,000, those with higher battery capacity have crossed the Rs 1-lakh mark, making them unattractive to the buyers.

Crisil, in a report, said that the new norms preclude more than 90% of the lithium ion battery-driven models. “We believe more than 95% of the electric two-wheeler models being produced now will not be eligible for the incentive under FAME II,” Crisil noted.

A senior official of an e-bike maker said the government has recognised that there is a huge gap in the subsidy but failed to amend it. “While the Niti Aayog has accepted that the scheme needs to be changed, the transport ministry is not in agreement and not given any response on the request,” the official said.

Electric vehicles account for less than 0.5% of the total vehicles sold in India, with majority contribution from two-wheelers, given that prices are relatively lesser. Lack of enough charging infrastructure and high prices continue to keep consumers on the back foot.

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