The Society of Manufacturers of Electric Vehicles (SMEV) has released what it says shows a grim highlight of a cursory audit on behalf of 7 electric two-wheeler manufacturers affected by the Ministry of Heavy Industry’s decision to block FAME 2 subsidies.
The audit by SMEV’s chartered accountants indicates the total cumulative damages to affected companies could account for over Rs 9,000 crore on a conservative basis.
This cumulative loss are on account of unpaid dues, interest, debt, loss of market share, reputational loss, cost of capital and potential recapitalisation, to approximately Rs 9,075 crore ever since the Heavy Industry held up their subsidies since 2022.
SMEV says while these need to be formally audited to establish an exact figure, most OEMs agree that these are by far more conservative than realistic. Fact is some may never recover, and some may just wind up.
Sanjay Kaul, Chief Evangelist SMEV pointed out that it is ironic that while the industry engages with prospective investors about deploying $1 billion (Rs 8,247 crore) in the Indian EV sector, the losses already correspond to almost the same amount of money for the troubled E2W OEMs.
In a letter to the Ministry of Heavy Industries Minister, Mahendra Nath Pandey, SMEV states that the OEMs are reaching breaking point owing to daily mounting losses. The letter proposes that if the intention of the Ministry was to punish these OEMs, this delay is practically finishing them as this punishment has continued for over 22 months, which itself is a crime.
“It appears that the OEMs have a serious predicament because apart from the money held up for 18-22 months as unpaid subsidies, and the subsequent claim of Ministry of Heavy Industries to claw back older subsidies, their new models have not been allowed to be uploaded on the NAB portal – in effect blocking them from doing any business at competitive prices. It has to be admitted that this is prima facie unsustainable. I propose that these companies having suffered enough and having paid any penalties due many times over in sheer losses, may kindly be absolved and permitted to continue to do business,” said Kaul.
Wind Up India
The SMEV letter further states that ironically these affected companies were the original start-ups and unicorns when there was no EV ecosystem in India. Being pure-play EV manufacturers, they do not have ancillary businesses like the traditional legacy players have. That means that specialist start-ups have nowhere else to go if their fundamental line of business is squeezed.
“Start-Up India should not become Wind Up India” mentions the letter.
As a resolution, SMEV has proposed creation of a Sinking Fund by the Ministry to help OEMs on the brink of closure get back on their feet through soft loans, grants or other such mechanism that can revive them as it falls within Heavy Industry Ministries ambit to build the EV eco-system through financing initiatives.
