The sales of electric two-wheelers declined once again in the Q1 2019, owing to the stringent FAME II (Faster Adoption and Manufacturing of Electric Vehicles in India – Phase II) requirements, reported the Economic Times. The report cited data from Society of Manufacturers of Electric Vehicles (SMEV); it shows that only 1,700 electric two-wheelers were sold Q1 as opposed to 30,000 units in Q1 2018 — a decline of 94% year-over-year.
This is because of a lengthy certification process for EVs under FAME II, which come into effect in April 1, 2019. Currently, given the tedious certification process, only 5 electric vehicle manufacturers — Ather Energy, Ampere, Okinawa, Jitendra Electric Vehicles, and Hero Electric — have been certified to avail the subsidies under FAME II. Sales for the month of April dipped to almost zero, according to SMEV. The association also said that Tata Motors, Mahindra & Mahindra, Kinetic Green Energy and Power Solutions, and Saarthi have received certificates under FAME II — only for three and four-wheelers.
Dipping sales of electric two-wheelers under FAME II
According to FAME II rules, all original equipment manufacturers (OEMs) are to get their electric two-wheeler models certified by recognised testing agencies such as Automotive Research Association of India’s (ARAI), under Rule 126 of Central Motor Vehicle Rules, 1989, in order to be able to claim incentives.
The government launched FAME II in February with a total outlay of Rs 10,000 crores for 3 years from 2019-2022. This incentive scheme was an extension of the FAME I, which was introduced in 2015. FAME II is aimed at achieving electrification of public transportation, including shared transport. Under the scheme, for 3-wheelers and 4-wheelers, incentives will only be provided to vehicles used for public transport or registered for commercial purposes. Only 2-wheeler for private use will be able to claim FAME II incentives. EVs sare also required to ensure 50% localisation to claim incentives. However, the scheme links incentives to battery capacities, leading to reduction of incentives for 2-wheelers from Rs 22,000 per kWh under FAME I to Rs 10,000 per kWh in FAME II.
In March, SMEV had written to NITI Aayog stating that the city-speed electric 2-wheelers had become costlier by Rs 10,000-12,000, which may discourage people from purchasing the vehicles. In April, Crisil note had that the electric 2-wheeler industry may experience turbulence in the initial phase of the FAME-II, and that 95% of the electric 2-wheeler models will not be eligible for incentives under FAME II.
States draft EV policies, while Centre lags
Apart from the FAME II, the Centre is yet to come up with a national electric vehicle policy to provide a dedicated electric vehicle framework. Meanwhile, around 10 states are ready with their EV policy drafts. While Maharashtra, Karnataka, Andhra Pradesh, Uttar Pradesh and Kerala have their final policies ready, while Uttarakhand, Telangana, New Delhi and Bihar have their policies in the draft stage. Gujarat’s EV policy is in the pre-draft stage, and is yet to be made public.
The state of Tamil Nadu is reportedly joining the bandwagon, reports the Economic Times. The state government’s draft policy is ready and expected to release by August end, the policy may include the provision of incentives targeted at vehicle manufacturers and allied industries, with a 3-5 year validity package which will contain special sops to attract the early adopters. According to the report, Tamil Nadu will also give investors with options to choose from GST refunds, capital subsidies, and payroll-based incentives. It also suggests doing away with road tax with a 5-year validity period for electric passenger vehicles.
Disclaimer: An earlier version of the headline incorrectly said that the percentage drop was 43%, we apologise for the error.