Ola, Ather and other electric two-wheeler prices may rise soon. Here is why

Prices of electric two-wheelers from Ola Electric, Ather Energy, Hero Vida and other manufacturers could up significantly in near future as the Centre plans to reduce subsidy under the FAME II scheme to promote electric vehicles. The Ministry for Heavy Industries has proposed subsidy on electric two-wheelers to 15 per cent. If its proposal is accepted by Centre's panel overseeing the FAME II revision process, it will impact the prices of all the models that fall under the subsidy scheme.

At least 24 electric two-wheeler manufacturers, who avail benefit under FAME II scheme, met earlier this week to discuss the matter. The outcome of the meeting was to keep demand incentive at ₹10,000 per kWh of battery capacity. Besides this, consensus was also reached on capping ex-showroom price of electric two-wheelers from 40 per cent to 15 per cent. A government official was quoted by news agency PTI saying, "It was decided that we will transfer the unutilised subsidies to the tune of ₹1,500 crore from 3 Wheelers and 4 Wheelers to 2 Wheelers but it was found that at the current rate of disbursal (40 pc cap on ex-factory price), the scheme will end in two months."

The ministry's proposal will be reviewed by the Programme Implementation and Steering Committee (PISC) and a final decision is expected soon.

The cut in subsidy may happen even though the ministry has proposed to increase its outlay for electric two-wheelers under the FAME II scheme. As of now, there are no plans to extend the FAME II scheme after March next year despite demands from several manufacturers. The government may not even introduce FAME III scheme either.

The decision to reduce subsidy despite higher fund allocation under FAME II is aimed to bolster India's EV infrastructure further. Union Minister Mahendra Nath Pandey said “The consensus reached during the stakeholder consultation signals a positive step towards sustainable transportation solutions in India. With continued efforts and collaboration between the government and industry, India can become a global leader in sustainable transportation and reduce its dependence on fossil fuels."

The FAME II scheme was launched in India four years ago. The scheme was applicable for three years, which was later extended by two years. The current scheme will officially end on March 31 next year. The scheme has an overall outlay of ₹10,000 crore aimed to incentivise electric vehicle buyers to push for EV transition aggressively.