Incentives, FAME-II subsidy may cut EV prices by Rs 30,000: ICRA

Incentives under the Gujarat government’s electric vehicle (EV) policy, coupled with enhanced subsidy under the Centre’s FAME-II scheme, will lead to a price reduction of electric two-wheelers by around Rs 30,000 in the state, according to ratings agency ICRA.

With the state government also offering incentives for electric four-wheelers at Rs 10,000 per kilowatt-hour (kWh), the ratings agency said there is a possible price reduction of Rs 1.5 lakh to Rs 3 lakh for electric cars in Gujarat.

The Gujarat State Electric Vehicle Policy, 2021, which will commence from July 1, 2021, for a period of four years, is targeting 1.1 lakh electric two-wheelers (e2W), 70,000 electric three-wheelers (e3W) and 20,000 electric four-wheelers (e4W) during the policy period.

Under the policy, a demand incentive of Rs 10,000 per kWh is being provided by the state government for e2W, e3W and e4W over and above any subsidies available from the central government, with the maximum ex-factory prices being capped at Rs 1.5 lakh, Rs 5 lakh and Rs 15 lakh, respectively, for the three vehicle categories.

ICRA Vice-President and Sector Head (Corporate Ratings) Ashish Modani said, “As per our estimates, the recent amendment by the Department of Heavy Industries (DHI) as well as incentive by GoG (government of Gujarat) could result in a price reduction of about Rs 30,000 on an e2W.”

It is substantial and will help in achieving price parity with conventional two-wheelers, he added.