Sudden reduction of subsidy of electric two-wheelers may lead to major decline in EV adoption: SMEV

SMEV on May 23 said the sudden reduction of subsidy of electric two-wheelers may lead to a major decline in EV adoption, impacting the entire industry for a considerable period of time

Society of Manufacturers of Electric Vehicles (SMEV) on May 23 said the sudden reduction of subsidy of electric two-wheelers may lead to a major decline in EV adoption, impacting the entire industry for a considerable period of time.

Startup players in the electric mobility space, however, welcomed the government's decision saying it was time for the EV industry to stand on its own.

The Heavy Industries Ministry has notified changes for reducing subsidy provided under FAME-II (Faster Adoption of Manufacturing of Electric Vehicles in India) scheme applicable on electric two-wheelers registered on or after June 1, 2023.

Subsequently, for electric two-wheelers, the demand incentive will be ₹10,000 per kWh. The cap on incentives for electric two-wheelers will be 15% of the ex-factory price of vehicles from 40% at present.

Reacting to the changes, Society of Manufacturers of Electric Vehicles Director General Sohinder Gill said, "The sudden reduction of subsidy may lead to a major decline in EV adoption, impacting the entire industry for a considerable period of time."

The ground reality is that the Indian market remains price-sensitive, and the total cost of ownership is not firmly established in consumers' minds, he asserted.

Mr. Gill further said with the majority of petrol two-wheelers costing less than ₹1 lakh, there are fewer chances of consumer spending upwards of ₹1.5 lakh just factoring in the total cost of ownership.