The sales of premium high-speed electric two-wheelers could see major disruption and prices might shoot up significantly, thanks to a proposed revision in the FAME 2 budget outlay.
It was on May 17, Financial Express online broke the story on how the Department of Heavy Industries in a meeting with electric two-wheeler makers had discussed the future of FAME 2 subsidies for the segment.
In fact, one of the most likely possibilities is to reduce the subsidies for electric two-wheelers from the existing 40 percent to 15 percent. This would mean premium electric two-wheelers would now be priced almost double that of their IC-counterparts.
For instance, at present, the cost of the Ather 450X (without performance software) comes to Rs 171,879 (ex-showroom), gets FAME 2 subsidy of Rs 55,000 and Rs 18,300 State Subsidy (in New Delhi), effectively bringing the on-road price to around Rs 130,415. But if the new FAME 2 subsidy revision comes into effect, the price will increase by almost Rs 30,000, making the on-road price of the Ather 450X to Rs 160,415 in New Delhi. For comparison, the base model of the Honda Activa the highest scooter sold in the country has a on-road price of around Rs 87,852 in New Delhi.
But on the other hand, for most mass-market models (priced under Rs 1 lakh) being sold in the country, the proposed revision will mean their subsidies will come down from the existing Rs 33,000 to around Rs 15,000.
It is also important to note that the proposed revision in the subsidy is expected to come into immediate effect starting next week. According to sources, the announcement will come before May 26, and will be in effect immediately. This is primarily to discourage aggressive pre-buying in the market by OEMs to push sales before the new pricing comes into picture.
One may argue, that why is there a rush by the government to push such a move. The reason is that the allocation of funds under FAME 2 for the electric two-wheeler segment is now left to a mere Rs 988 crore, which needs to last until at least next year when the fate of the FAME scheme would be decided.
Given the present scenario, an average of around 45,000 electric two-wheelers per month can be supported till February next year under the new proposed subsidy. If the sales exceed the same, the subsidy will get exhausted way beforehand. In fact, if the present subsidy is continued to offer, by next month there will not be a budget left under FAME 2 for the electric two-wheeler segment.
Interestingly, according to sources, the government of India is also exploring the possibility of providing subsidies in terms of the product category. The mass market no thrills & frills models will get a lower subsidy of Rs 10,000 per KW, while the premium models will get around Rs 15,000 per KW.
