Ola, Ather Energy Under Govt Scanner For Falsely Claiming EV Subsidies Under FAME

Top electric vehicle (EV) players Ola Electric, Ather Energy, TVS Motor, and Hero Motocorp’s Vida are now reportedly under the government scanner for falsely claiming subsidies under the Faster Adoption & Manufacturing of Electric Vehicles (FAME) scheme.

The Ministry of Heavy Industries (MHI) is looking into the allegations that the EV players were artificially keeping their vehicle prices lower to claim subsidies, the Economic Times reported.

The report, citing senior government officials, said that the EV makers might have falsely claimed at least INR 300 Cr subsidy by mispricing their escooters by billing integral parts – charger and proprietary software – separately from the vehicle.

The government has asked the EV original equipment manufacturers (OEMs) to come clean on these allegations, as per the publication. Under the FAME scheme, electric two-wheeler OEMs cannot claim subsidies on the vehicles with an ex-factory price of over INR 1.50 Lakh.

Meanwhile, a senior ministry official told Inc42 that the MHI has received a complaint and is verifying the claim internally. However, the ministry has not sent any notices to the OEMs yet.

Inc42 has reached out to Ola Electric, Ather Energy and Hero MotoCorp for comments on the development. The story will be updated on receiving responses from the companies. 

A source also confirmed that Ola Electric has not received any notice or intimation from the MHI on the matter. Meanwhile, Ather Energy’s website shows that its ex-showroom vehicle price includes FAME II subsidy, Ather Dot/Portable charger and performance upgrade software.

The allegations, if proven true, can have an adverse impact not only on the OEM players in question but also the booming EV industry.

Registrations of other leading EV players including the likes of Hero Electric, Okinawa Autotech, and Ampere Vehicles have already faltered after the government stopped their vehicle subsidies due to the ongoing probe pertaining to domestic component manufacturing.

As per a report, besides the probe and stopping the subsidies, the Indian government is now mulling legal actions against these players for claiming subsidies under FAME-II despite not adhering to the minimum localisation norm for component manufacturing. 

Under FAME-II, EV OEMs need to ensure that their vehicles contain at least 50% of domestically-manufactured components for claiming the subsidy. 

The issue has begun hurting the fast-growing EV industry, which is evident in the falling two-wheeler registration numbers. The registrations, which crossed the 77K mark in October last year, fell to around 64K in January. Industry experts had already predicted that the FAME-II subsidy issue would result in a fall in the demand for escooters.

Launched in 2019, the FAME-II scheme had a total outlay of 10,000 Cr. While the scheme is supposed to end in 2024, as per the government’s update till December 9, 2022, it had spent just INR 2,464.27 Cr as demand incentives.

It has also increased the allocation for FAME-II to INR 5,172 Cr in the Budget for FY24 from INR 2,898 Cr in FY23. However, according to Sohinder Gill, the director general of Society of Manufacturers of Electric Vehicles (SMEV), the outlay in FY24 has increased as subsidies worth INR 1,100 Cr are still held up in the government’s coffers while the OEMs have already passed on these subsidies to customers.