Starting from June, electric vehicles (EVs) in India are expected to become more expensive as the government plans to reduce the FAME (Faster Adoption and Manufacturing of Electric Vehicles) subsidy.
The Ministry of Heavy Industries recently announced that the FAME II subsidy for electric two-wheelers will be reduced from Rs 15,000 to Rs 10,000 per kilowatt-hour (kWh). Additionally, the maximum subsidy on the ex-factory price of vehicles will be capped at 15% instead of the previous 40%.
To compensate for the reduction in subsidies, the total fund allocation for electric two-wheelers under Phase II of FAME India will be increased to Rs 3,500 crore by utilizing the Rs 1,000 crore allocation initially meant for electric three-wheelers. This move aims to support the development of public charging infrastructure for electric vehicles, which is projected to be completed by March 2024.
Although the subsidy rate cut is disappointing for EV buyers, the government’s investment in infrastructure development is expected to provide a boost to the country’s electric mobility goals. As of February 15, 2022, Phase II of the FAME Scheme had supported approximately 8,82,967 electric vehicles with demand incentives amounting to about Rs 3,311 crore, according to government data. Moreover, the central government has sanctioned 6,315 e-buses to 65 government entities across 26 states and union territories under the FAME Scheme.
The reduction in subsidies will directly impact the pricing of EVs. For example, Ather Energy’s electric scooters are projected to see a price increase of around Rs 32,500. Currently, the Ather 450X (without performance software) has an ex-showroom price of Rs 171,879. However, with the existing FAME 2 subsidy of Rs 55,000 and a state subsidy of Rs 18,300 in New Delhi, the on-road price is approximately Rs 130,415. After the revision in FAME 2 subsidies, the on-road price of the Ather 450X is expected to rise to Rs 160,415 in New Delhi, representing a significant increase for potential buyers.
