Significant rise in EV – two wheeler price in India due to 1 of major issue.

EV – Two wheeler Impact

In India rush traffic Two wheeler are the primary source of the transport and it is the cost effective for the most of the India population. Most of the south Asian Population is dependent on the fossil fuel based energy.  A shift towards two wheeler (EV) category is underway. Probably in next 5 to 7 yrs. of timeline India targeting to achieve goal of 80% two wheeler and three wheeler on road would be electric.

two wheeler

By the way the trajectory encountered the fall back because of some reduction in government subsidy and market consolidation that may occur in cyclic basis. In recent month May the government revised its incentive schemes as follows. (Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicles, commonly called FAME-II).

Incentive was $183 (15,000 Indian rupees) per kWh for up to 40% of the vehicle price -> Now its $122 (10,000 Indian rupees) per kWh of battery capacity, with a maximum cap of 15% of the factory vehicle price.

Customers purchasing vehicles get a discount as part of the FAME-II scheme, and the government later allocate money to the company, Kind of reimburses.

Changes in the scheme resulted in the sell number of the electric bike in country, June mark as the lowest sales of the year. Number tells the situation where in month of June there are total 45,829 units sold where as in May 105,371 units sold. Amendment in the FAME-II scheme cause around 56% decline in the sales.

Effective from June 1, the updated scheme applies to most electric two-wheelers in India, excluding those priced more than $1,800 (147613.50 Rupee), which are not eligible for the subsidy. Due to subsidy the pace of production and sell of two wheeler electric vehicle was high. Sales of subsidized electric two-wheelers and three-wheeler crossed the 10 lakh mark faster than expected.

According to the latest update, the government provided a subsidy of about $550 to $670 per vehicle, based on the specification of the vehicle. Its come down to $255 that is 21,000 rupee, impacting manufacturers to increase the prices of most bike and eventually started impacting their sales.

As per Ravneet S. Phokela, the chief business officer of Ather Energy ” No EV player at this point is profitable, and nobody is making enough money so as to absorb [the revised subsidy’s impact]”

Like Ather other top leading company in India Like TVS raised the vehicle price and passed it to the customer. Newer entrants such as River, which recently raised $15 million in a funding round led by Dubai’s Al-Futtaim Group,also planned to increase the praise per Unit on newly launches.

Sohinder Gill, CEO of Hero Electric said that “A glitch at the very beginning is not a favorable way to support EV adoption and we believe a correction is necessary now,”

What Number says- EV two wheeler market share

In Year 2023 Jan – sales was 64680 , In Feb the sales was 66,075 , march its 86,318 , April 66,812 , May 1,05,371 and after the changes in scheme sales in June was 45,827 which is less than the yearly average.

But If look towards the bigger pitcher the market share of the electric two wheeler was 0.2 % of over all two wheeler market. whereas the Q1 2023 it was 6%. This change will lead to achieve India the goal targeted in 2030.

Conclusion –

Government of India and leading EV brands need to work together to find the better solution on ongoing issue due to the change in the scheme. As PLI scheme boost the initial level of the sales and production of the EV , Government need to look after those scheme to sustain the EV eco-system.

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