New Delhi: The Indian electric two-wheeler industry witnessed a major shake-up in June 2023 following the government’s revision of the FAME-II subsidy scheme. According to JMK Research, the reduced subsidies had a significant impact on prices, with electric two-wheeler original equipment manufacturers (OEMs) implementing an average price hike of 21%. As a consequence, retail sales plummeted by over 55% in the same month, leaving both consumers and manufacturers grappling with the repercussions.The FAME-II subsidy revision, announced on May 19, 2023, brought about significant changes in the demand incentive and incentive cap for electric two-wheelers registered after June 1, 2023. The demand incentive per kWh was reduced to INR 10,000 from the previous INR 15,000, while the incentive cap was scaled down from 40% to 15% of the E2W’s ex-factory price.
The impact of the subsidy revision was most notable in the price adjustments made by various E2W OEMs. Major players in the market, such as Greaves Cotton-owned Ampere EV and Jaipur-based Hop Electric, increased their product prices by INR 21,000 to INR 39,100 and 30%, respectively. The price hike was particularly sharp for Ampere EV, with its models Primus and Magnus witnessing a maximum increase of 33% and 36%, respectively.
| Models | Before June 1, 2023 (ex-showroom) | From June 1, 2023 (ex-showroom) |
| Ola S1 | INR 99,999 | INR 1,14,999 |
| Ola S1 Pro | INR 1,24,999 | INR 1,39,999 |
| Matter AERA | INR 1,43,999 | INR 1,73,999 |
| Ather 450X | INR 1,57,000 | INR 1,65,000 |
| TVS iQube | INR 98,564 | INR 1,23,776 |
| Ampere Primus | INR 1,09,900 | INR 1,46,355 |
| Ampere Magnus | INR 77,249 | INR 1,04,900 |
| Okaya Freedum LI-2 | INR 69,999 | INR 74,899 |
| Okaya Faast | INR 1,14,000 | INR 1,39,951 |
| Okaya Faast F2T | INR 89,000 | INR 1,07,923 |
| Bajaj Chetak | INR 1,22,000 | INR 1,44,000 |
| Hop Leo HS | INR 75,000 | INR 97,504 |
| Hop Leo LS | INR 65,000 | INR 84,360 |
| Hop Lyf | INR 65,000 | INR 75,000 |
Source: JMK Research
Several prominent E2W models experienced price surges after the subsidy revision. Notably, Ola Electric’s popular models, S1 and S1 Pro, became costlier by 15% and 13%, respectively. The adverse impact of the price increase was evident in Ola Electric’s June sales, which saw a 38% decline compared to the previous month.
Other notable models, such as TVS iQube and Bajaj Chetak, also faced significant price hikes of 26% and 18%, respectively, resulting in sharp drops in month-on-month sales of 62% and 73%.
The sharp increase in prices caught the highly price-sensitive Indian electric two-wheeler market off guard, leading to an overall low sales figure in June 2023 for most brands.
The decline in sales, which amounted to 55% in June 2023, reflects the significant impact of the revised FAME-II subsidy on the electric two-wheeler market.
As the market grapples with the immediate aftermath of the subsidy revision, analysts suggest that the coming months will provide a clearer picture of how consumers respond to the increased cost of electric two-wheelers and its impact on OEM earnings. Additionally, with FAME subsidies set to end by March 2024, the repercussions of the recent revision on sales could serve as a precursor for the industry’s outlook in FY25.
The FAME-II scheme, approved by the Indian government with an outlay of INR 10,000 crore for three years starting from April 1, 2019, aims to provide financial incentives to promote the adoption of electric vehicles in the country. The recent subsidy revision led to few industry leaders raising questions about its impact on the EV industry’s growth and the future of electric mobility in India.
