Electric two-wheelers to become cheaper in India as a result of FAME II subsidy amendments

The Department of Heavy Industry (DHI) has made significant changes to the scheme of Faster Adoption and Manufacturing of (Hybrid) and Electric Vehicles II (FAME II).

In a notification issued late Friday, it was stated, “For Electric 2 Wheelers, demand Incentive will be @ Rs 15000/- per kWh.” The incentive for e-two-wheelers is being hiked to Rs 15,000 per kWh, a 5,000 per kWh rise from the previous subsidy rate.

The notification also mentioned that the cap on incentives for electric two-wheelers will be 40 percent of the cost of vehicles, twice the previous limit of 20 percent.   

This will reduce the cost of electric scooters and motorcycles in the country and persuade more riders to convert from combustion-engined vehicle to an electric one. It will directly benefit customers who buy electric two-wheelers in India. By increasing subsidies for electric two-wheelers, the government aims to lower the burden on EV manufacturers.

Shortly after the notification was issued, Ather Energy, one of India’s fastest-growing electric two-wheeler manufacturing company, announced an incentive to its customers by a price drop of ₹14, 500 in its 450X electric scooter.

To qualify for FAME II advantages, electric two-wheelers must meet certain criteria, including a minimum top speed, range per charge, acceleration, and energy consumption efficiency. To qualify for the subsidy, the electric scooters must have a minimum range of 80 kilometres on a single charge and a max speed of at least 40 kilometres per hour.

According to Hindustan Times, Tarun Mehta, CEO and Co-founder of Ather Energy, said that the revision in the FAME policy of increasing the subsidy by 50% per kWh is a “phenomenal move”. Stating that the sales of electric two-wheelers have grown despite the pandemic, he mentioned that with additional subsidy, the electric vehicle sales may disrupt the market and clock 6 million+ units by 2025. He also stated that the government’s continuing support for EV adoption, with an emphasis on locally-built electric two-wheelers, will make India the “EV manufacturing hub.”

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