Electric 2-wheeler industry hits roadblock after changes in Fame

Volumes impacted by price hikes because of cut in subsidy from June 1

- ARSHAD KHAN

THE electric two-wheeler industry has hit a speed bump following the changes in Fame 2 Subsidy scheme.

At about 54,000 units, e2W sales in July were better than June's 46,000 units. However, these figures are nowhere near the 1.04 lakh units retailed in May and over 86,000 units sold in March.

"Despite the improvement (in July), the volumes remain impacted by material price hikes taken by electric two-wheeler OEMs (original equipment manufacturers) to help offset the impact of reduction in FAME II subsidy from June 1, 2023," said Rohan Kanwar Gupta, Vice President & Sector Head Corporate Ratings, ICRA Limited.

The government revised the FAME-II subsidy amount to ₹10,000 per kWh as against the earlier amount of ₹15,000 per kWh. It also capped incentives on e-2Ws at 15% of the ex-factory price of vehicles from 40% earlier. These changes increased e-2W prices by up to ₹30,000 a unit.

A big jolt to subsidy-dependent first movers