FAME II Gives Electric Two-Wheeler Makers A Hard Time

After the implementation of phase II of the Faster Adoption and Manufacturing of Electric Vehicles in India (FAME II) policy by the government on April 1, 2019, India’s electric low to mid-speed vehicle market has hit rock bottom in terms of sales.

The society of manufacturers of electric vehicles (SMEV) told PTI that the electric two-wheelers manufacturers are learning to survive without the government’s support, as the FAME II scheme fails to promote low and mid-speed electric vehicles in the country. “Sales have dropped drastically,” said director general Sohinder Gill.

The FAME II scheme focusses on incentivising high-speed electric vehicles, charging stations and commercial electric vehicles among others. This is done through a certification process for vehicles. This process has impacted the electric scooter manufacturers who were part of the FAME I scheme, to a large extent incurring huge losses in the process.

According to SMEV data, the sales of FAME II qualified electric two-wheelers witnessed a 93.84% decline in April-December 2019, where it stood at 3K units compared to 48K units in the same period in 2018 when FAME I scheme was in place. As a matter of fact, after the implementation of FAME II, India recorded near-zero sales of electric two-wheelers.

Gill said that the transition from shifting from low and mid-speed vehicles to high-speed with heavy discounting has brought the industry to a standstill position as there is no proper subsidy or incentives from the government. “Many electric two-wheeler companies who had entered the EV market to create an impact in the space are now making more losses than ever,” Gill added.

Hero Electric Blames FAME II For Slump In EV Sales 

Earlier this week, the electric two-wheeler manufacturer Hero Electric had said to push back its investment plans of INR 700 Cr for the next year, for the very same reason. The company said that the revamp of FAME II policy has jeopardised the mass adoption of electric vehicles in the country. It believes that cost-effective electric vehicles are crucial for the growth of the industry.

Amid the slowdown, Hero Electric was optimistic about the EV market. In November 2019, the company had plans to invest INR 700 Cr investment into the manufacturing and sales of electric two-wheelers in India.

Hero Electric MD Naveen Munjal further stated that even if the government plans to revamp the FAME II scheme, the EV industry will have to kick-start from scratch. He urged the government to take immediate action and come up with a plan that helps all the stakeholders involved in the electric vehicle ecosystem to really fasten the EV adoption and increase the sales of EV vehicles in the country.