Electric two-wheeler companies to bear the brunt of paused FAME sops

Companies likely to lose Rs 20k per vehicle if they are not registered on time and subsidy not granted

Electric two-wheeler companies, including Bajaj Auto, Ola Electric and TVS, have decided to absorb the subsidy loss on vehicles which have been sold but not registered by 31 March, which is the last day for being eligible for subsidy under the FAME 2 scheme. 

This will force the companies to take a hit of an average Rs 20,000  per vehicle, which is the subsidy passed on to consumers by adjusting the amount from the vehicle’s on-road price.

While the overall inventory levels with the manufacturers is not clear, most companies, in anticipation of the problem, had started liquidating their stocks by offering substantial discounts, Some have also reduced their production for the month of March to ensure that the inventory is under control.

The government has replaced the FAME 2 scheme with a new Electric Mobility Promotion Scheme (EMPS) 2024, under which it has earmarked a subsidy of Rs 500 crore for the next 4 months from April 1. The scheme is only for electric two-wheelers and three-wheelers. The subsidy on electric two-wheelers has been slashed to half and is now pegged at Rs 5,000 for 1 KWH of battery, with a cap of Rs 10,000 (compared to Rs 22,500 earlier).     

TVS, in a communication to its dealers, have stressed the urgency of getting all vehicles with them registered by 31 March, saying that if this is not done, “we will be losing the subsidy amount of Rs 21131/Rs 22065 per vehicle.”

Since the FAME-2 scheme is fund-limited and the government will settle the claims on a first-come basis, TVS has also urged dealers to file the FAME claims within the time limit of 15 days from the date of sale. A TVS spokesperson, however, declined to comment on the issue and their plans.  

Talks are also on to resolve some of the contentious issues regarding the new subsidy scheme which has raised serious concerns amongst original equipment manufacturers (OEMs). They say that these issues could deprive them of subsidy under the new scheme for one to one-and-a-half months. Under the EMPS scheme, all existing electric two-wheeler models have to be certified again by the testing agencies, which could take four to six weeks. That’s not all. The OEMs have to re-register their companies as well as their dealers for the new scheme.

The good news for the industry is that testing agencies have started re- certifying electric vehicles which are already on the road, including those by Ola Electric and Ather Energy, amongst others. However, it is still not clear whether this will make them eligible for subsidy under the EMPS scheme from Day One (April 1), or if they have to wait till the other documents required for the re-registering OEMs and their dealers have also been completed.

“The new portal and the processes for EMPS are not ready yet. They are set to be launched on April 1. Industry had asked for the seamless transfer of vehicles from the FAME 2 portal to the EMPS portal through back-end management,  but there is nothing in writing yet from the ministry of heavy industries,”  says a senior executive of an electric vehicle company