Fame 2 Subsidy for Electric Two Wheelers Slashed

Fame 2 subsidy for Electric Two Wheelers slashed to Rs 10,000/kWh from Rs 15,000/kWh, If you are asking yourself these question about Fame 2 subsidy, teamautoexpert will guide you in proper way,  as  Electric two-wheelers in India will be more expensive starting from June 1, 2023, as the government of India has reduced the subsidy under the FAME India (Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India) Scheme to Rs 10,000 per kilowatt hour (kWh) from Rs 15,000/kWH. Furthermore, the incentive maximum has been reduced to 15% of the ex-factory price of a two-wheeled EV, down from 40% previously. That’s a 37.5% reduction, which will almost certainly result in increased vehicle pricing.

Fame 2 subsidy for Electric Two Wheelers slashed:

According to a gazette notification issued on Sunday, May 21, the Ministry of Heavy Industries (MHI) indicated that these revisions will take effect on June 1, 2023, in a partial modification to its notification issued vide S.O.2258(E) dated June 11, 2021.

The three-year FAME II Scheme, for which the government approved an outlay of Rs 10,000 crore, began on April 1, 2019 and gained a two-year extension in June 2021, bringing the scheme’s effective period to March 31, 2024.

In order to boost demand for electric two-wheelers, MHI increased the demand incentive from Rs 10,000/kWh to Rs 15,000/kWh in June 2021, with the maximum cap increased from 20% to 40% of the EV’s cost. The government’s current move restores the subsidy to what it was two years ago, as well as a 5% reduction in the maximum EV cost threshold.

According to the FAME India dashboard, 10,98,406 EVs have been sold in India as of today (May 22, 2023). There are 988,676 two-wheelers, 96,376 three-wheelers, and 8,917 four-wheelers among them. The FAME II Scheme calls for a million (10 lakh) e-two-wheelers, 500,000 e-three-wheelers, 55,000 e-passenger vehicles, and 7,090 electric buses to be subsidised. The two-wheeler market is just 11,324 units shy of its target.

The three-year FAME 2 scheme, foe which the government earmarked an amount of Rs 10,000 crore, kicked in from April 1, 2019. It extended the scheme by two more years in june 2021, thereby extending the effective period of the subsidy scheme up to March 31, 2024. In june 2021, in an effort to accelerate demand for electric two-wheelers, the MHI ( Ministry of Heavy Industries ) increased the demand incentive from Rs 10,000 per kWh to Rs 15,000 per kWh, with the maximum cap increasing from 20% to 40% of the cost of the EV. The government’s latest move rewinds the subsidy to even lower than what it was two years ago.

As the FAME 2 India dasbord, 9,88,676 EV two-wheelers have been sold in India as of May 22, 2023. The FAME 2 Scheme had originally outlined subsidy for 10 lakh EV two-wheelers, meaning the segment is just 11,300 Units shy of its target. EV sales across segement hit a record high of over 1.17 million units in FY 2023, of which the two-wheeler industry accounted for 61% that is (7,20,733 units).

As a result of this latest revision, all electric two-wheeler manufacturers that are eligible for the FAME 2 subsidy will have had to increase their product prices by approximately Rs 25,000 – Rs 30,000. For instance, the subsidy amount available for the Ather 450X and the Ola S1 pro earlier between Rs 55,000 – Rs60,000, and with the revised rates, the subsidy amount will be slashed by more than half.

This subsidy reduction comes at a time when the domestic electric two-wheeler market, which had surpassed 7,00,000-units sales in FY 2023, is witnessing a month on month sales decline. Retail sales have dropped to 66,810 units in April 23 compared to a monthly avarage of 75,000 units in the preceding quarter.

Highlights :

• Government issues notification outlining reduction in FAME-II subsidy for electric two-wheelers.
• Total subsidy will now be capped at 15 per cent of the vehicle’s ex-factory price, as opposed to 40 per cent at present.
• Prices of premium electric two-wheelers set to rise by anywhere between Rs 20,000 to Rs 35,000 from June.

How Industry Reacts To FAME-II Subsidy Reduction ?

While most manufacturers have yet to reply to the news of the FAME-II subsidy decrease, a few major names in the E2W business have reacted to the government’s decision to reduce incentives.

Tarun Mehta, co-founder of Ather Energy, responded to the news on Twitter, saying that “the industry must stand on its own feet very soon” following the subsidy cut. Mehta cited a message from Ather’s official Twitter account, which stated that prices for the 450X might hike by up to Rs 32,500 starting June 1.

Bounce CEO Vivekananda Hallekere also jumped to Twitter, calling the subsidy decrease a “great move,” claiming that the plan in its current form was “illogical” and that producers were being incentivized “to be inefficient.” Notably, E2Ws like the Bounce Infinity E1 would have a lower reduction in subsidy amount, as the greatest subsidy available for it so far was Rs 28,500 due to its smaller battery.

So, I personally feel FAME subsidies being reduced is a great move. Current subsidy scheme isn’t logical and the incentive is to be inefficient and pack as much as battery to claim highest subsidy.