Govt’s Announces ₹500Cr FAME II Incentive to Electric Scooter Makers

Four Electric Scooter manufacturers – Ola Electric, Ather Energy, TVS Motors, and Hero MotoCorp is set to receive FAME II Subsidy from The Ministry of Heavy Industries (MHI). The Govt announced to release over INR 500 Cr of FAME II subsidy after they agreed to reimburse their customers who were charged extra for chargers. The move comes after several months of investigations into allegations of manipulation of prices of vehicles by these manufacturers.

According to government sources, Ola Electric will receive the highest payout of around INR 370 Cr, while Ather Energy is set to receive about INR 275 Cr. TVS Motors is expected to get subsidy reimbursement to the tune of INR 150 Cr or more, and Hero MotoCorp will receive a payout of INR 28-INR 30 Cr. The scheme, with a total outlay of INR 10,000 Cr, provides electric two-wheelers with a maximum subsidy of 40% on the total cost of the vehicles, provided their maximum ex-factory price is INR 1.5 Lakh per unit.

Reports suggest that the four electric two-wheeler manufacturers were allegedly billing escooter chargers and proprietary software separately as accessories to keep the vehicle prices under the INR 1.5 Lakh cap of the FAME-II scheme. The ongoing problems around FAME II have already impacted the sales growth of most of the two-wheeler EV manufacturers. Investigations are also ongoing against 14 other electric two-wheeler manufacturers for flouting localisation norms of the scheme.

Electric Scooter Manufactures agree to pay penalties following investigations

Last week, reports surfaced that these players have agreed to pay the penalties following investigations. In a letter written to a parliamentary committee, industry body Society of Manufacturers of Electric Vehicles (SMEV) criticised the Centre for the delay and lack of communication on the matter. The industry body claimed that two-wheeler EV OEMs had not received subsidies for 4.5 Lakh vehicles while they had passed on the benefits of most of this to their customers as discounts.

It must be noted that Ola Electric and Ather Energy have not yet disclosed the exact amount they will be refunding to their customers, but they have publicly disclosed the decision to initiate refunds. In total, the four electric two-wheeler manufacturers have agreed to refund an aggregate amount of about INR 288 Cr to their customers.

As per reports, Ola Electric will refund INR 130 Cr to 1 Lakh Ola S1 Pro customers, while Ather Energy will refund INR 140 Cr to 95,000 Ather 450X consumers. The ongoing problems around FAME-II have already impacted the sales growth of most of the two-wheeler EV manufacturers. Investigations are also going on against 14 other electric two-wheeler manufacturers for flouting localisation norms of the scheme.

Hero Electric and Okinawa were the first two to come under the scanner for violation of localisation requirements, and they have reportedly been slapped with a total fine of INR 249 Cr.

The decision by the MHI to disburse the subsidies to the manufacturers comes as a relief to the industry, which has been facing several challenges in recent months. With the electric vehicle market in India witnessing significant growth in recent years, the government’s support through schemes like FAME-II is crucial for the industry’s sustainable growth.

In conclusion, the decision to release the FAME II subsidy to the four electric two-wheeler manufacturers comes as a positive development for the industry. However, the ongoing investigations into allegations of price manipulation and flouting of localisation norms by several manufacturers are likely to impact the industry’s growth in the short term. It remains

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