After Ola, three others to repay customers for 'off-board charger'

All the three electric two-wheeler manufacturers have written to the ministry of heavy industries on Wednesday expressing their willingness to repay customers

Days after Ola Electric agreed to reimburse customers for paying for “off-board chargers”, three other companies — Ather Energy, TVS and Hero MotoCorp’s Vida — have followed suit. All three electric two-wheeler manufacturers wrote to the Ministry of Heavy Industries on Wednesday expressing their willingness to repay customers.

The total amount to be reimbursed by all four defaulter OEMs (original equipment manufacturers) is Rs 287 crore.
The companies have also agreed to add the off-board charger as part of the ex-factory scooter price. Business Standard has reviewed copies of the letters.

Bengaluru-based Ather will reimburse Rs 140 crore to 95,000 consumers of its 450X model of electric two-wheeler (E2W).

Along with this, the ministry will recover Rs 25 crore from Ather for the reduced battery capacity on account of not buying the upgraded software.

Hero MotoCorp will repay Rs 2.23 crore to 1,100 consumers who purchased VIDA V1 Plus and VIDA V1 Pro models of e-2W until March 2023.

Ola has already agreed to reimburse Rs 130 crore to 100,000 consumers who purchased the Ola S1Pro until March 30, 2023.
TVS, on the other hand, will refund Rs 15.61 crore to 87,000 people who bought its iQube S model between May 2022 and March 2023.

K N Radhakrishnan, director and CEO, TVS, said that the company fully complies with regulations specified under the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME) scheme, and added. “To alleviating ambiguity and ensuring a clear policy direction, TVS Motor will offer a goodwill benefit scheme for its customers who have paid over and above the threshold limit fixed by FAME. The overall cost impact to TVS Motor Company is less than Rs 20 crore.”

Ola, Ather, and Vida, did not furnish an explanation until the time of going to press.

To reduce the working capital burden on the industry, the ministry has come out with a simple formula — the government will reimburse the subsidy withheld but reduce it by deducting the amount that they must pay off to customers. Depending on the money that the companies reimburse to customers every month (whether it should be in three or six months is being debated), an identical amount of the balance subsidy would be transferred to them.

The formula will help E2W players like Ather and Ola the most. Sources say that Ola Electric has withheld subsidy of around Rs 500 crore. As it has to pay customers Rs 130 crore, it will be reimbursed Rs 370 crore upfront. The formula will help the scooter companies to get upfront working capital and not impact production schedule — a worry that many were facing.

Some manufacturers had suggested that they could repay customers in kind — like additional warranties or software updates for free. But the ministry rejected the proposal.

The ministry sent notices to the company in February after receiving complaints of ex-factory price breach. According to the norms under FAME, the subsidy given to E2W makers is linked to their adherence to a maximum ex-factory price of Rs 1.5 lakh.

The ministry is likely to conclude the ex-factory price investigation in a matter of days. So far, Hero MotoCorp is the only company to give a fixed deadline to reimburse its customers. In its letter to the ministry, the company has given a deadline of June 30. Others are likely to set their deadline soon.

 

EV body welcomes ministry’s bid
 
Nitin Kumar
New Delhi
 
The Society of Manufacturers of Electric Vehicles (SMEV) has welcomed the move by the Ministry of Heavy Industries to start settling pending issues of OEMs.

“The beginning of resolution of disputed issues for OEMs augurs well for the sector”, said Sohinder Gill, director general, SMEV, adding, “It is time the sector is allowed to stand on its feet again and efforts to revive e-mobility can begin”.

Terming the ministry’s clean chit to various companies as a move in the right direction, Gill said that the sector was desperate for a resolution of the subsidy blockade that has all but choked companies for the last 15 months.

However, he called for a tapered localisation in the sector a sustainable option.

“Forced localisation comes with dangers, as we have seen some OEMs trying to procure locally at the cost of quality components that have resulted in fires and short circuits and parts that had to be recalled later,” he said.

Gill also highlighted that companies such as Hero Electric, Okinawa Autotech and Ampere, who were market leaders in FY19 and FY20, had reported drastic drop in sales in April 2023. “If these companies are not revived, the organisations that built the EV ecosystem for the initial 10 years or more may have to shut down, setting a bad example in the EV world, including the global investment funds,” he said in a statement.