FAME 2 subsidy end, election, heat wave dampen India's EV sales in May

Electric vehicle sales in India witnessed a 22.3 per cent slump in May 2024 compared to the same month a year ago. The data revealed by the Vahan portal shows that last month 123,107 units of electric vehicles were registered in India, which noted a fall from 158,459 units recorded in the same month a year ago. Interestingly, May 2023 also marked the peak sales in the last calendar year.

While electric vehicle sales in India across different categories such as four-wheelers, two-wheelers and three-wheelers, the Vahan data reveals that there was a modest recovery of 8.8 per cent sequentially. In April 2024, India recorded sales of 113,092 units of electric vehicles.

The data also revealed that in May 2024, out of the total 123,107 units of electric vehicles sold, two-wheelers accounted for about 51.7 per cent, while three-wheelers accounted for roughly 42.5 per cent. The passenger vehicles contributed around 5.3 per cent to the total sales, while electric buses contributed 0.2 per cent only. The remaining percentage was contributed by the agricultural vehicles, goods carriers and others, constitution less than 0.4 per cent.

What possibly caused electric vehicle sales slump?

The industry experts predicted it few months back that electric vehicle sales in India would see a slump in registration with the FAME 2 regime ending. With the subsidy support over, the consumers are worried about the higher cost they have to bear for purchasing electric vehicles.

Besides this, the general elections also impacted the sales of electric vehicles in India. Consumers, especially the fleet and business sector buyers often postpone their purchase decisions during elections. The automakers too wait for the new government to form before infusing investment. Besides these, the rising preference towards hybrid cars is impacting the sales of electric vehicles.

Another factor that possibly has impacted the sales of electric vehicles is heat waves. Over the last couple of weeks, several parts of the country have witnessed severe heat waves, which possibly impacted the consumers' footfall in the showrooms, denting sales of electric vehicles. Interestingly, this factor dampened the sales of electric vehicles and conventional internal combustion engine-propelled vehicles.

Speaking on the sales decline for electric vehicles, Hyder Khan, CEO of Godawari Electric Motors, said that this sales slump in May 2024 could be primarily attributed to recent changes in government policies, namely the conclusion of the FAME 2 scheme and the announcement of the new EMPS scheme. “The ongoing general elections have led customers to defer their purchases. Another significant factor is the record-breaking summer or heat waves, which have affected consumer behaviour and reduced overall market activity," Khan added further.

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