The Society of Manufacturers of Electric Vehicles (SMEV) DG Sohinder Gill said the dealers have indicated that they will have to shut shop in the next few months as demand has shrunk given that most customers do not want e-bikes without the subsidy.
By Pritish Raj
As many as 200 dealers of electric two-wheelers including Hero Electric and Ampere Vehicles are planning to wind up operations in the next few months, impacted by falling demand owing to lower subsidy under the FAME-II scheme. Experts said the closure of these dealership would effectively lead to a job loss of around 1,200 people.
The Society of Manufacturers of Electric Vehicles (SMEV) DG Sohinder Gill said the dealers have indicated that they will have to shut shop in the next few months as demand has shrunk given that most customers do not want e-bikes without the subsidy. “While volumes have fallen significantly, the working capital and employee costs will remain the same and with time, the fixed costs will grow, making the business unviable for dealers,” Gill told FE.
Under the (Faster Adoption and Manufacturing of Hybrid & Electric Vehicles) FAME-II scheme, the subsidy for e-bikes has been capped at Rs 10,000 for battery strength of 1 kiloWatt, 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. As a result, less than 10 vehicles were certified by the government agencies in April against at least 5,000 units certified on an average every month under the FAME I scheme (April 2015- March 2019).
While a total of 59,000 electric two-wheelers were sold in the H1FY19, sales in H2FY19 stood at around 69,000 units. Gill said, since more than half of the vehicles sold were registered under the scheme, average monthly sales of FAME-certified vehicles were around 5,000 units a month.
An official of a e-bike maker said since certification under FAME-II has become so complex, companies have to sell without claiming the subsidy, which has impacted demand as vehicles become even more expensive without the incentives. To put things in perspective, an e-bike of 1kW battery worth Rs 80,000 was earlier sold at around Rs 60,000 as the subsidy amount was around Rs 20,000. Post FAME-II, the same vehicle will be sold at Rs 70,000 after claiming the subsidy amount of Rs 10,000. Without any subsidy, the e-bike will again cost Rs 80,000.
Manufacturers have time and again raised concerns over the clauses of the FAME-II scheme, which was rolled out from April 1 spanning three years, saying it has been prepared in haste with several complexities. As per the department of heavy industries, under the FAME-II, two-wheelers will need to have a minimum acceleration of 0.65m/s. Earlier, there were no norms for acceleration. Besides, the government has mandated 50% localisation of content in the vehicles to avail the benefits under the scheme, which manufacturers said is difficult to maintain as companies have to import several components, in addition to lithium-ion batteries and electric motors used in electric vehicles. Companies making electric two-wheelers include Mahindra, Okinawa, Ather Energy, Avan Motors, Lohia Auto, Electrotherm and TVS.