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FAME 2 Changes: Electric Two-Wheeler Impact



  Aug 25, 2023

Changes in FAME 2 Subsidy Scheme and Impact on Electric Two-Wheeler Industry


Q1: What is the FAME 2 Subsidy Scheme?

A1: The Faster Adoption and Manufacturing of Electric Vehicles (FAME) 2 Subsidy Scheme is a government initiative in India that provides financial incentives to promote the adoption of electric vehicles (EVs), including electric two-wheelers.
 

Q2: What changes were made to the FAME 2 Subsidy Scheme?

A2: The government revised the FAME 2 subsidy amount for electric two-wheelers, reducing it from 15,000 per kWh to 10,000 per kWh. Additionally, the incentives on e-2Ws were capped at 15% of the ex-factory price of vehicles, down from 40% earlier. These changes led to an increase in e-2W prices.
 

 Q3: How did the changes in the FAME 2 subsidy scheme impact the electric two-wheeler industry?

A3: The changes in the FAME 2 subsidy scheme had a significant impact on the electric two-wheeler industry. Sales of e-2Ws experienced a decline due to the price hikes resulting from reduced subsidies. Some leading players in the industry saw sharp drops in sales.
 

Q4: Which companies were affected by the changes in the subsidy scheme?

A4: Companies like Hero Electric and Okinawa AutoTech, which were once leading players in the industry, experienced a sharp drop in sales following the subsidy reduction. For example, Hero Electric's sales in July 2023 were one-tenth of its average monthly sales in 2022.
 

Q5: How did the changes affect the industry's target of selling 1 million e-2Ws in a year?

A5: The drop in sales due to the subsidy reduction is expected to make it challenging for the industry to achieve its target of selling 1 million electric two-wheelers in a single calendar or financial year. In FY23, the industry achieved only 71% of the one million unit sales target set by the NITI Aayog.
 

Q6: What factors will determine the industry's ability to achieve the 1 million sales milestone?

A6: The industry's ability to achieve the 1 million sales milestone will depend on various factors, including the efforts of original equipment manufacturers (OEMs) to lower vehicle costs through value engineering, vendor discounts, and the launch of more affordable EV models.
 

Q7: How has the adoption of lower battery pack vehicles impacted the industry?

A7: Some OEMs are exploring the adoption of vehicles with lower battery packs to reduce costs. While this may make EVs more affordable, it can impact performance and range since fewer battery cells power the vehicle.
 

Q8: How are industry experts viewing the future of the electric two-wheeler market?

A8: Industry experts are optimistic about the latter half of the year, especially during the upcoming festive season, as brands strategize to leverage strong market demand. The adoption of EVs and advancements in technology are driving OEMs to innovate and offer more affordable options.
 

Q9: What are the expectations for sales trends and achieving the 1 million sales target?

A9: Industry experts remain hopeful that continuous and growing sales trends will prevail, eventually leading to the achievement of the ambitious target of selling 1 million electric two-wheelers.


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