The Indian auto industry has never seen as much uncertainty and volatility as we have since the boom in EV popularity over the last few years. It’s not the vehicles themselves that are to be blamed, but the sheer unpredictability that has surrounded the FAME subsidy, which has been the life-blood of this emerging space. So far, we’ve seen the subsidy abruptly increased, decreased, allegedly misused, subsequently denied and everything in between. Now, there’s a new flavour of uncertainty afoot.
This is an election year, and while the interim budget has allocated an additional Rs 1,500 crores to the overall FAME II subsidy fund, it remains to be seen what happens after that – and what happens after the election, when the final budget comes into play. As things stand, there is possibly going to be a period of no subsidy benefit between March 31 – when the current FAME II subsidy expires – until the point when a new scheme is announced post the formation of the new government.
That uncertainty alone is reason enough to buy an electric scooter or bike before March 31, 2024, if you’ve been considering it. Manufacturers have also been offering some juicy price revisions in the last month or so. In January, the Ather 450S electric scooter's price was slashed by about Rs 20,000 and the Bajaj Chetak electric scooter has also become more appealing with its Rs 1.15 lakh starting price. And, of course, there’s Ola’s aggressive price cuts as well, which come ahead of the company’s IPO aspirations.
Right now, there’s very little clarity on whether these prices will last for long, or even what the future of the subsidy itself will be. This industry still needs a few more years of support, so it's highly unlikely that the subsidy will be removed altogether, but we may see it take a different direction. For example, after years of inadvertently favouring expensive, premium products, it won’t be surprising to see the next generation of the subsidy shifting focus to public transport and charging infrastructure. In such a situation, the FAME benefit, for two wheelers in particular, could be lower than current levels.
That’s exactly the point here – there are many lingering questions and it's why you won’t see any big ticket EV launches right now. For example, the highly anticipated Ather Rizta family scooter is likely to go on sale only after there is more clarity for the company to put its cost structures in place. The more conventional Ather Rizta is a hugely important product for the company’s future and getting its price right will be key. That can only be done when there is clarity on what to expect from the subsidy.
So if you’ve been considering buying yourself an electric two-wheeler, now might be a good time to go for it.
Hormazd Sorabjee
Avik Chattopadhyay
Shapur Kotwal
