June sees e-two-wheeler registrations fall sharply across all players

Drop 60% over May record of 105,348 units

Electric two-wheeler registrations dropped sharply in June across all players to 42,124, a mere 40 per cent of the record registrations in May of 105,348.

Last month, companies had moved aggressively to liquidate their stocks before June 1 when they had to increase prices to compensate for the reduction of the government’s FAME 2 subsidy.
 

The industry estimates that the sharp increase in price will impact overall sales in FY24 which are expected to be between 1 million to 1.2 million, less than half of Niti Ayog projections of 2.4 million by the end of this financial year. In FY23, the industry sold 0.75 million vehicles.
 

“Due to the increase in prices, 30 per cent of the potential customers who would have bought electric vehicles at the earlier price are out of the market,” said a leading electric scooter company executive. “They will only come back when we launch the stripped down versions of our scooters at prices closer to the earlier ones. It will take us a few months to come out with those affordable models, so we don’t expect it to go up to normal levels before the festive season.”
 

The executive added that he does not see the market hitting more than 1 million in FY24, far lower than both government and industry projections.     
 

Sohinder Gill, director general of the Society of Manufacturers of Electric Vehicles, expressed the same view. “The trend will continue in the short term before it stabilises or undergoes an uptick during the festival season. But the potential loss will not be made up until the government triples the subsidy budget for a year or two and pays the subsidy backlog,” said Gill.
 

 The situation would have been better, he said, had the commuter segment not been forced out of the market by the logjam caused by subsidy disbursements being blocked and the failure to resolve the dispute. In this shrinking market, Ola Electric and Ather Energy accounted for over 50 per cent of the registrations in June. Ola saw its registrations drop by 42 per cent to 6,332 vehicles as compared with May. Incumbent players like Bajaj Auto experienced a euphoric May when its electric scooter registrations crossed the 10,000 mark for the first time, only to be followed by a fall in June to just 2,675 vehicles. TVS’s registrations dropped by a third.

Companies such as Hero Electric have stopped production of their electric vehicles as they do not have the working capital (around Rs. 350 crore to Rs. 400 crore) required to be up and running. Sources say banks are ready to disburse them money only after the government releases the subsidy dues owed them and this will only happen after the pending investigation concludes whether they violated the rules on localisation. As a result, Hero Electric registrations fell to a new low in June of a mere 1,076, down by nearly half from May. The company has gone from being one of the top players last year to having a market share of only 2.6 per cent. The other big player, Okinawa, has a market share of over 6 per cent.