FAME subsidy saga: Ola to repay customers for separately billed chargers

Ola Electric has agreed to compensate consumers for the price of the charger which was billed separately as an add-on rather than being included within the ex-factory price of the electric scooter when they bought it.

Ola has indicated in meetings with officials of the Department of Heavy Industries that it will comply with the directive to offer this compensation. 

The company, however, declined to comment.   

The other three main players, Ather Energy, TVS and Hero Motocorp have not yet decided whether to follow suit. Like Ola Electric, they came under scrutiny on the charger issue and have also had meetings with the government. 

Electric scooter makers say that including the charger in the scooter price would cost them an additional Rs 50-100 crore, depending on the company because customers were billed for chargers that ranged between Rs 9,000-19,000 for smart fast chargers.

At the heart of the issue is their right to avail themselves of the government’s FAME 2 subsidy. They are eligible if they cap the ex-factory price of the vehicle at Rs 1.50 lakh (40 per cent of this is given as subsidy).

But the companies have been staying within the cap only by billing for the chargers (and the software) separately as an accessory, even though it is an integral part of the scooter which won’t even start without it.

A whistle blower had complained that if they included the charger in the ex-factory price, the total price would have shot up to Rs 1.53 lakh to Rs 1.90 lakh, disqualifying them from the subsidy.

Consequently, the Department of Heavy Industries, started an investigation and also started withholding the subsidy disbursement for the scooters sold from January onwards. 

Following discussions with the Department though, Ola and Ather complied with the order to include the charger price in the ex-factory price from April onwards, even if it meant having to absorb the cost.

They also tweaked their on-road prices lower so that they fall within the Rs 1.5 lakh ex-factory cap. With this, they will now face no problem getting the FAME 2 subsidy from April onwards. 

What remained unresolved was how to compensate customers who have already paid for the chargers. 

The Department of Heavy Industries asked the companies to pay back the customers, after which the pending subsidies would be released. Ola seems to be the first to comply with the order.

“Even though legally we are in a strong position, we have complied with the directive and incorporated the price of charger, even though we are taking a hit,” said a senior executive of one of the players.

One reimbursing customers, he said his company was still thinking about it. 

“Till this matter is resolved, disbursements of subsidies for those scooters sold earlier will be withheld. But for the new vehicles rolling out in April, there will be no issue,” he said.