The electric 2-wheeler segment was on the rise in the past few months but it seems like it is now slowing down or even falling down. The main reason for this fall is the rollback of FAME II subsidies by the government which has led to the price hike in the electric 2-wheeler segment.
The Vahan data depicts a 60% decline in total sales in the month of June 2023. Electric two-wheeler sales in India grew from under 2,000 units in 2013 to 7.4 lakh units in FY23 but dipped to 36,000 units in June 2023.
The electric 2-wheeler sales were going up every month for the past 5 years and it was expected to go the same. The reason people opted for electric vehicles was rising fuel prices and the cost-effective nature of EVs.
But on June 1, 2023, Govt of India decided to reduce the FAME II subsidies from 40% to 15%. This reduction in subsidies led to the price increase of electric vehicles by 15,000 to 30,000 INR. The sales will surely dip after this as already seen in June 2023 but one can hope it won’t fall way below the 40,000 units mark that was the average sales before in 2022.
Although the market experts suggest that the sales will rise again as it will give time for customers to get accustomed to new prices. The next few months till the festive season could be difficult, and the estimation of 2 million E2W sales seems difficult for now.
Sales of all major electric two-wheeler manufacturers have declined significantly in June 2023, following the recent modifications in FAME II subsidies. The cuts have made electric two-wheelers less affordable for many consumers, who are now opting for traditional petrol-powered scooters.
The decline in sales is a setback for the growth of the electric two-wheeler market in India. The government will have to recalibrate its strategies to create a more conducive environment for the E2W industry. The government must take steps to address this issue if it wants to achieve its target of 10 million E2Ws on the road by 2030.
Source - Rushlane