Electric two-wheelers now more affordable after govt revises FAME II subsidies

Aiming faster adoption and manufacturing of electric vehicles in India, the Centre has decided to reduce burden on EV manufacturers by increasing subsidies on electric two-wheelers.

A view of the vehicle assembly line at the Ather factory.
A view of the vehicle assembly line at the Ather factory.

According to a notification issued by the Department of Heavy Industry on Friday, the incentive for electric two-wheelers has been increased to 15,000 per kWh, up by 5,000 per kWh from the earlier subsidy rate.

This move will directly help customers who choose to buy an electric two-wheelers in India. Ather Energy, one of India's fastest growing electric two-wheeler manufacturing company, was one of the first to pass on the incentive to its customers by bringing down price of its 450X electric scooter.

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Ather Energy has announced that Ather 450X will now cost 14,500 less after FAME II subsidy revision. It said, "We'll announce on-road prices and any other necessary information over the next few days. Website will be updated later to reflect all this information."

Tarun Mehta, CEO and Co-founder of Ather Energy, said, "The revision in the FAME policy, increasing the subsidy by 50% per KWh is a phenomenal move. Sales of electric two wheelers have grown despite the pandemic and with this additional subsidy, we expect electric two wheeler sales to disrupt the market, and clock 6 million+ units by 2025. Ather Energy already has plans to expand distribution to 30 cities in the next 6 months and this increased subsidy will help accelerate consumer demand, immensely. The Government's continued support to drive adoption of EVs, with a keen focus on locally built electric two wheelers will make India the manufacturing hub of EVs."

Sudarshan Venu, Joint Managing Director of TVS Motor Company, said, "We welcome the government’s continued support to EVs. Sustainable mobility solutions are very important for the future and TVS is investing significantly behind this. The improved incentives for electric two wheelers will increase penetration. Such policy direction should lead to indigenous development of future technology."

Naveen Munjal, Managing Director at Hero Electric, said, "The increase in the cap of subsidies for EVs will be a game changer driving consumers towards electric scooters even as petrol prices continue to touch the 100 mark."

Out of the 10,000 crore subsidy earmarked in the FAME-II scheme, two-wheelers are the largest beneficiary, specially the e-scooters. However, not every electric two-wheeler may benefit from this scheme. According to a report by CRISIL, around 95% of the electric scooters in India are not eligible for the FAME-II subsidy.

According to the scheme, the electric two-wheelers looking to benefit need to have certain parameters like minimum top speed, range per charge, acceleration and energy consumption efficiency to qualify for FAME II benefits. The electric scooters need to deliver a minimum range of 80 kms on a single charge and must have a top speed of at least 40 kmph to qualify for the subsidy.

According to FAME-II norms, only the high-speed electric scooters powered by higher than 250 watt electric motor and have a top speed of above 25 kmph, are eligible for the FAME-II subsidy, which varies depending on the price of the electric scooter.

The electric vehicle penetration in India has been witnessing a slow but steady growth thanks to the increasing demand for for these zero-emission models in two and three-wheeler segments.

First Published Date: 12 Jun 2021, 09:11 AM IST
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