PM E-Drive scheme: A closer look at the finer details

Minister of Heavy Industries and Steele HD Kumaraswamy officially kicked off the PM Electric Drive subsidy scheme today and launched the official portal highlighting the broad strokes of the scheme. In short, the central government has, in a bid to increase EV penetration across segments, allocated a total of ₹10,900 crore for a period of two years. The basic details of the scheme can be found here.

How does it differ from the FAME scheme?

At the outset, the key difference between the PM E-Drive yojana and the FAME I and II incentive program is that the latter offered subsidies to private electric four-wheelers while the PM E-Drive yojana has been created to primarily boost EV sales of e2W and commercial e3W, while also boosting EV infrastructure. It does indirectly benefit electric four-wheelers as it has allocated ₹2000 crore for public charging stations, with 22,000 EV chargers being set up for electric four-wheelers. While these are going to be DC fast chargers, their exact output in kW has not been mentioned.

Another difference between the two schemes is that, unlike the FAME scheme, the PM E-Drive scheme does not have any cut-offs in terms of battery size. Essentially, although battery capacity has been taken into account, there is no actual cap on battery size, only on the ex-showroom price of a vehicle. Instead, it opted for a simpler and more straightforward price cut-off. For instance, only registered two-wheelers priced below ₹1.5 lakh can avail of subsidies. For e3W and e-carts, the price cut-off is ₹2 lakh, while for electric three-wheelers falling under the L5 category, that is, electric three-wheelers with maximum speed exceeding 25kph, the cut-off is ₹5 lakh. All prices mentioned are ex-factory, and not on-road. This means that the mid-level variant of the Ather 450X, priced at ₹1.4 lakh, can avail of a maximum subsidy of ₹10,000 (till the end of March 2025) while the top-end variant, presently priced at ₹1.55 lakh, cannot. The only exception is e-buses which do not have a battery capacity cap, but instead have a price ceiling of ₹2 crore.

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Then there is the fact that the subsidies will be halved post-March 31st, 2025. Although the scheme has been outlined for two years, ending on March 31st, 2026, the subsidies provided will be halved during FY 2024-2025. For example, while electric two-wheeler buyers can avail a maximum subsidy of ₹10,000 in the first year ( ₹5000/per kWh of battery capped at ₹10,000), they will get half of that amount ( ₹2500 per kWh of battery, capped at ₹5000) if they purchase it the following financial year. However, the scheme states that the indicative number of vehicles benefitting from the scheme would increase by roughly 35%-40%. For instance, while 10,64,000 electric two-wheelers have been earmarked to avail subsidy in the first year, that number would go up to 14,15,120.

The finer details

Upon closer look at the official release, it appears that the criteria for eligibility have been tightened so as to leave no room for misinterpretation and block any unregistered, low-range e2w from potentially availing any subsidy. Therefore the following annexures have been added to the scheme: both electric two and three-wheelers need to have a minimum range of 80kph. For e2W, another caveat has been added: they need to have a maximum top speed exceeding 40 kph. What this essentially means is that the multitude of e-scooters that can be ridden without a license including several models by Okinawa (R30, Lite), Ampere and even Hero Electric (Flash LX, Atria LX) are not available for subsidy.

In addition to that, the scheme clarifies that it applies only to e2W and e3W featuring “advanced batteries" while these indicate lithium-ion phosphate (the most common and energy-dense form of battery chemistry), lithium cobalt oxide, lithium nickel manganese cobalt and others, they also include sodium-ion and solid-state electrolyte, the likes of which are currently not being used for manufacturing e2w and e3w, the latter of which have to be registered for commercial use in order to be eligible for subsidies.

It should also be noted, that although the scheme is applicable till March 2026, the exhaustion of the allotted amount of ₹10,900 crore prior to that would mean the termination of said scheme effective immediately. On the flip side, should the allocated amount not be utilised in the stipulated period, the scheme would automatically be extended beyond March 31, 2026.

Certain details such as the eligibility criteria for e-trucks and e-ambulances will be provided later, at an unspecified date.

While the portal highlights all the key aspects of the scheme. The primary aim of the scheme is two-fold – to reinstate public and manufacturer confidence in the electric mobility sector and to get electric two and three-wheeler manufacturers out of the sales slump they’re currently in. Although brands like Bajaj Auto, TVS and Ather have recently seen an increase in EV registrations, others like segment leader Ola Electric have seen a drop in sales. Electric car and SUV sales, which hit a 19-month low in September, are yet to have their day in the sun, as are their hybrid counterparts.

(Parth Charan is an independent automotive journalist and writer who has written on cars, motorcycles and the automotive industry for the past 12 years. He lives in Mumbai.)

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