Electric scooters and bikes in India are set to get costlier from June 1, 2023, as the government has reduced the subsidy on these vehicles. The reduction in subsidies is part of the government's plan to phase out subsidies for electric vehicles by 2025.
The subsidy for electric two-wheelers has been reduced from Rs 15,000 per kilowatt-hour (kWh) to Rs 10,000 per kWh. The subsidy for electric three-wheelers has been reduced from Rs 25,000 per kWh to Rs 20,000 per kWh. The subsidy for electric cars has been reduced from Rs 10 lakh to Rs 5 lakh.
The reduction in subsidy is likely to lead to an increase in the prices of electric vehicles by 10-15%. This is likely to impact the demand for electric vehicles in India. The government has set a target of electrifying 30% of all new vehicles by 2030. But the reduction in subsidy is likely to make it difficult to achieve this target.
Electric vehicle (EV) sales in India hit a record high of over 1.17 million units in the financial year 2022-23 (FY2023), according to data from the FAME India dashboard. The two-wheeler segment accounted for the majority of EV sales, with 7,20,733 units sold, followed by the three-wheeler segment with 2,42,563 units and the passenger car segment with 1,97,916 units.
The FAME-II Scheme, which was launched in 2019, has been instrumental in boosting EV sales in India. The scheme provides subsidies for the purchase of EVs, which has made them more affordable for consumers.
The two-wheeler segment is close to achieving its target of 10 lakh EV sales under the FAME-II Scheme. As of May 22, 2023, a total of 9,88,676 EV two-wheelers have been sold in India. This is just 11,324 units shy of the target.
The government has extended the FAME-II Scheme till March 31, 2024. This will provide an opportunity for the two-wheeler segment to achieve its target. The growth of the EV two-wheeler segment is being driven by a number of factors, including rising fuel prices, government subsidies, and increasing awareness about the benefits of EVs.
The EV two-wheeler segment is expected to continue to grow in the coming years. This is likely to lead to a significant reduction in air pollution and greenhouse gas emissions in India.
Source - Autocar India