[Update] FAME-II Subsidy Cut: Customers To Feel The Pinch As Ola, Ather, Matter Hike Escooter Prices

Update | 17:28 IST, June 1

Ather Energy confirmed in a statement on Thursday (June 1) that it has revised the prices of its scooters following the revision of FAME-II subsidy by the government.

“Starting today, our best-selling scooter – 450X with Pro Pack will be available at INR 1,65,000 (ex-showroom Bangalore), which is just marginally higher than prices in March 2023. We have tried to contain the prices as much as possible in the interest of our customers and have registered the lowest price hike in the industry post the FAME-II subsidy reduction,” said Ravneet S Phokela, chief business officer of Ather Energy.

As per the electric mobility startup, the revision of FAME-II subsidy has resulted in a subsidy reduction of around INR 32,000.

On the other hand, Ola Electric also confirmed the price hike in a statement. “While the subsidies have reduced significantly, Ola’s focus on engineering and innovation has enabled the brand to minimise the price impact, and interestingly now the S1 Pro would be retailed at its initial launch price,” the startup said.

Meanwhile, AMO Mobility founder and MD Sushant Kumar also told Inc42 that the company has increased the prices. “Our esteemed Jaunty Plus electric scooter will now transit into new price point zone. Thus, our focus must shift towards reduction of production cost while simultaneously offering right product fit for our valued consumers. This new paradigm compels electric vehicle brands to intensify their efforts, driving exponential improvements in efficiency.”

However, Hero Electric said it would not increase its vehicle prices. “Despite the extreme financial crunch forced upon us due to subsidies stuck with MHI for over 15 months, we will continue to do our bit in offering affordable mobility solutions to the discerning customers by holding on to our current prices till we can,” said Sohinder Gill, CEO of Hero Electric.

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Days after the Centre took the decision to cut the per vehicle FAME-II subsidy for two-wheeler electric vehicles (EVs), at least three EV companies, including Ola Electric and Matter, are increasing the prices of their escooters.

A spokesperson of Ola Electric said that the Bhavish Aggarwal-led startup will increase the prices of its S1 and S1 Pro models by INR 15,000 each.

Ola S1 Pro escooter will now cost INR 1,39,999 as against INR 1,24,999 earlier, while Ola S1 will cost INR 1,29,999 after the price hike. The new prices will come into effect from June 1.

Meanwhile, a source told Inc42 that Ather Energy will also hike the prices of its escooters. However, the quantum of price hike couldn’t be ascertained.

An email sent to the company didn’t elicit any response till the time of publishing this story. The article will be updated on getting a confirmation about the price hike from the company.

Besides the two-wheeler majors, Matter, a new player in the space, will also hike the price of its vehicles by INR 30,000. 

Starting from June 6, 2023, pre-register prices for Matter AERA 5000 and 5000 Plus will be INR 1,73,999 and INR 1,83,999, respectively, pan India, the EV startup said in a statement. 

Matter began pre-bookings for its electric bikes from May 17. 

Meanwhile, a source said that Hero Electric has decided to not hike the prices of its escooters despite its subsidies not being cleared by the Centre. Hero Electric was not immediately available to respond to Inc42’s questions on the issue. 

At a time when EV adoption is on the rise in the country, it would be pertinent to watch how the increase in prices of electric two-wheelers affect sales. 

The FAME-II Saga

The FAME-II scheme, launched in 2019, has a total outlay of INR 10,000 Cr and initially aimed to support 10 Lakh electric two-wheelers, 5 Lakh electric three-wheelers, 7,000 ebuses, and 55,000 electric four-wheeler passenger cars by providing subsidies. 

However, two-wheeler EV manufacturers, including Hero Electric and Okinawa Autotech, came under the scanner the Ministry of Heavy Industries (MHI) in the later half of 2022 for allegedly flouting minimum localisation norms 

Subsequently, several other players such as Ampere Vehicles, Revolt, and Jitendra EV, among others, were also under probe for violating norms.

Besides, Ola Electric, Ather Energy, TVS, and Hero MotoCorp were also accused of keeping their vehicle prices artificially lower to claim FAME-II subsidy benefits.

Recently, reports emerged that the four players had agreed to reimburse around INR 288 Cr to customers who were billed for the chargers separately.

Amid all these, the government decided to cut the incentives to 15% of the ex-factory price of electric two-wheelers from 40% earlier. It also cut the demand incentive to INR 10,000/kWh from INR 15,000/kWh.

As per a report, the number of beneficiary two-wheelers under FAME-II scheme has been slashed to around 5,64,000 from 989,000 by the MHI.