Sales of electric two-wheeler (E2W) in India grew more than 2.5 times year-on-year (YoY) to 846,976 units in FY23, PTI reported. In comparison, the units sold in FY22 were 327,900.
The Society of Manufacturers of Electric Vehicles (SMEV) reported sales of 1.2 lakh low-speed e-scooters in FY23, as per the report. "In the E2W segment, the industry sold 726,976 high-speed E2W (top speed more than 25km/hr) in FY 2023," it added.
For comparison, the total number of low-speed e-scooters sold in FY22 was 75,457, while the total number of high-speed e-scooters sold was 252,443.
FAME II Impact
As per SMEV data, E2W adoption in FY23 ended "with an annual shortfall of more than 25 percent over the minimum target set by the NITI Aayog and various research organisations".
According to the industry body, withholding subsidies under FAME II due to non-compliance with Phased Manufacturing Programme (PMP) guidelines significantly impacts E2W sales.
"Ironically it was not the consumer demand but the sudden withholding of more than the Rs 1,200 crore subsidy already passed on by the majority of original equipment manufacturers (OEMs) to customers on the pretext of delay in localisation," it said.
Another Rs 400 crore of the OEMs operating in the premium-end also got stuck due to the allegation of under invoicing to bypass the FAME norms leading to crippling of their business operations due to extreme shortage of working capital, SMEV added.
"Today 16 companies that represent more than 95 percent of the industry are waiting for some resolution for the chaos and the fiasco of the FAME PMP are cleared to enable them to plan their businesses in the year FY24," it said.
SMEV Director General Sohinder Gill said, "With only 5 percent adoption in FY23 and the short-term goal of 30 percent and the EV mission of 80 percent adoption by 2030 looks more like a mirage." However, he added, "All is not lost and what perhaps can put the industry back on track is an extension of the PMP eligibility criteria by two years and strictly enforcing it from April 23."
Scheme, Subsidy, Supply Chain
In a statement, SMEV said the fate of the entire industry depends on the government's decision on whether or not the FAME scheme will continue.
In order to develop the EV ecosystem and make it self-sustaining, it is crucial to extend the FAME scheme for three to four years, the report stated.
"The confusion among players is making it difficult for them to develop a long-term strategy. Any abrupt reduction in subsidies will have a significant influence on the growth trajectory and could jeopardise the government's plan for e-mobility. It will have a negative effect and could completely eliminate a sizable portion of the market," it added.
EV industry officials noted that one of the major challenges in the supply chain is the lack of sufficient local manufacturing capacity for vital components like batteries and motors.
"Due to supply chain interruptions during COVID-19, the industry suffered greatly to find high-quality components," it added.
SMEV also called for rectification of the existing subsidy mechanism under which manufacturers pass the subsidy to the customer and claim it from the government post the sale.
"The current method lacks transparency, which may lead to OEMs manipulating sales to claim the subsidy fraudulently," it said, recommending the introduction of a direct subsidy mechanism that allows incentives to be directly paid to the customer by the government and avoids any discrepancy.
(With Inputs from PTI)