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The revised subsidy rates come in at a time when the electric two wheeler market has shown signs of slowing down
EVs are likely to get more expensive by Rs 25,000 to Rs 35,000 once the revised FAME II subsidy incentives come into effect from June 1st 2023 onwards. Thus popular electric scooters like the Ola S1 Pro and Ather 450X will become dearer. Currently, these EVs can get concessions of around Rs 55,000 to Rs 60,000 which will be reduced by more than half once the new incentive rates are enforced.
The move comes after electric two-wheeler sales have shown a downward trend in the recent past. While the industry crossed the 7,00,000-unit sales milestone in FY23, the industry's month-on-month sales have seen a decline. 66,810 scooters were sold in April 2023 whereas the monthly average stood at 75,000 in the previous quarter.
Popular electric scooter brand, Ola Electric, had earlier mentioned that the company is bracing itself for a world without subsidies for EVs and will focus more on in-house R&D and mass-scale production. And this could actually help companies such as Ola Electric and other large automakers such as TVS, Bajaj and Hero MotoCorp who have begun investing in the government's Production-Linked Incentive (PLI) scheme. Companies will aim to offset the increased cost to customers by achieving a lower production cost when the subsidies slowly trickle out of the picture.