As India slowly and steadily moves towards adopting electric vehicles, a lot has been achieved by targeted government policies. The government has, for a long time, made clear its commitment to encouraging EV adoption in the country. To this end, it has brought to the table several regulations and incentive programs designed to boost EV adoption.
Arguably, the FAME II scheme has been the most important among these incentive programs. It has been instrumental in providing prospective buyers more incentive to opt for electric two-wheelers for several years. Now, with newly revised FAME II guidelines, buyers have even more incentive to purchase electric scooters. This is because a lot of popular electric scooter models have received massive price cuts.
The FAME II program aims to subsidize the purchase of electric vehicles for the emerging EV customer base in India. Currently, a total of 124 vehicle models fall under this scheme. This includes two-wheelers, four-wheelers, and commercial vehicles like e-carts and e-rickshaws. To date, more than 78,000 vehicles have been sold under this scheme. The government has subsidized more than INR 2.25 crore in terms of sales.
With the revised FAME II guidelines, the amount of subsidy per vehicle has been further enhanced. The direct result of this has been large price cuts for most of the popular electric scooter models currently available in the country. Overall, this revision has the potential to boost EV sales even more and encourage more widespread EV adoption.
A history of FAME II
The central government of India makes use of a two-level strategy to encourage both the manufacture and adoption of electric vehicles in India. It provides subsidies to buyers of electric vehicles to facilitate the former. On the other hand, there are high import tariffs attached to electric vehicles. This encourages manufacturers to design and manufacture vehicles inside India. It has also been a major procurer of electric vehicles for its own use over the last few years.
The Faster Adoption and Manufacture of Hybrid and Electric Vehicles or FAME scheme came to force in 2015. In Phase I, the aim was to start encouraging the adoption of EVs in India by providing incentives to buyers in the form of subsidies. FAME I came to an end in 2019 and was replaced by FAME II, which is supposed to last till 2022.
The FAME scheme is an integral part of the National Electric Mobility Mission Plan of the Government of India. Recently, a set of revised FAME II guidelines came into force. These guidelines increase the amount of subsidy associated with buying EVs even more. As a result, a number of popular electric two-wheelers have received massive price cuts.
Revised FAME II guidelines
The recently revised FAME II guidelines can go a long way in driving decisions for potential EV buyers in India. Here is a summary of the important changes:
Earlier, the FAME scheme allowed for an INR 10,000 incentive for every kWh in electric two-wheelers. With the revised guidelines, FAME II now offers an INR 15,000 incentive for every kWh.
Earlier, the cap on the incentive afforded by FAME II was capped at 20% of the total cost of the vehicle. With the revised guidelines, FAME II can now provide an incentive cap of 40% of the total cost of the vehicle.
The eligibility criteria for electric scooters to fall under the FAME II scheme have remained unchanged. All-electric two-wheelers that have a range of at least 80 km on a full charge and have a minimum top speed of 40 kmph would be eligible under this scheme. Since this has not changed, all earlier electric scooters built to these specifications continue remaining under the scheme and will now cost even less for customers.
Affected brands and announced discounts
The revised FAME II guidelines have been unanimously praised and adopted by electric vehicle manufacturers across India. Most companies have already announced new, slashed prices for their popular products and have moved fast to pass on the reduced costs to their customers. The 50% increase of subsidy per kWh means that substantial discounts can now be offered to customers by sought-after EV manufacturers.
Leading the charge, for example, has been Ather Energy, manufactures of the popular Ather 450x electric scooter model. Both the currently available models, the 450x and the 450 Plus, have received a massive INR 14,500 price cut. With these price cuts, these premium electric scooters have come even more within reach of the budgets of discerning Indian buyers with limited budgets.
Similarly, TVS Motors, makers of the premium iQube electric scooter, have slashed the price of the model by over INR 11,000 across various markets. The model has also seen record sales in the month of April. With the new price cuts, sales are expected to increase even more.
Another important manufacturer, Okinawa Autotech, has announced price cuts over several models ranging from INR 7,209 to INR 17,892. Models like the iPraise+, the Praise Pro, and the Ridge+, all popular models, have all received price cuts. Ampere Vehicles, the e-mobility arm of Greaves Cotton and another popular e-scooter manufacturer, has announced price cuts over several models amounting up to INR 9,000. Their Zeal and Magnus Pro models now cost significantly less.
One of the largest and most popular manufacturers of electric scooters in the country, Hero Electric, has also announced price cuts for three models that fall under the revised FAME II guidelines. The single-battery Optima HX model now costs more than INR 8,000 less while the dual-battery variant receives a price cut of over INR 15,500. The largest discount comes with the popular Hero Electric Nyx HX model, which receives a price cut of over INR 17,000.
It is important to remember that low-speed models of electric scooters that do not require license or registration to drive do not fall under the FAME II scheme.
The future of electric scooter adoption
With manufacturers already witnessing the positive effect of the revised FAME II guidelines on electric scooter sales, key personnel in all relevant companies have shared their upbeat mindsets on the development. According to company CEOs across various manufacturers, these revised subsidies would go a long way in making electric scooters more affordable and improve reach across various markets. More people are expected to opt for electric scooters in the coming months and till the completion of the FAME II scheme in 2022.
Premium electric scooters remain the most important beneficiaries of the revised FAME II guidelines. However, this also throws into sharp context the fact that about 95% of all-electric scooters being sold in India do not fall under this scheme due to not meeting the criteria. We can only hope that there will be measures in place in the near future that covers those options as well.