‘Withdrawal of subsidy for EVs may lead to sluggishness for 2 years’

CHANDIGARH: Withdrawal of the government’s incentive on the sale of electric two-wheelers in April would prompt industry players to work hard and this could result in one or two more years of stagnated growth,Ather Energy’s CEO-co-founder Tarun Mehta said on Friday.

“The industry is no longer entirely dependent on subsidies for survival but an early discontinuation of the subsidy in April would prompt industry players to tighten their belts and work hard. Despite this resilience, such a scenario would still result in one or two more years of stagnated growth, pushing the industry further away from its targets,” the CEO of the electric two-wheeler firm said in a statement.

The Centre provides incentives on the sale of two-wheelers, three-wheelers, and four-wheelers under the FAME-II (Faster Adoption of Manufacturing of Electric Vehicles in India) scheme, which is ending in March this year. In June last year, the central government has already reduced the subsidy amount on electric two-wheelers to Rs 10,000 per Kwh from Rs 15,000 per Kwh. It also reduced the maximum subsidy cap of 40 per cent of the ex-factory price of the vehicle to 15 per cent.

Highlighting the “repercussions of a sudden subsidy reduction”, Mehta said the electric two-wheeler industry lost one year of growth in 2023.

“We finished calendar 2023 with the same volume as we began with. If things had gone according to plan, we would have at least doubled that. So, the growth slowed down,” he added.

On the electric two-wheeler sales in Chandigarh, Mehta said the city is a frontrunner in EV adoption and the absence of the FAME scheme could potentially impact the ongoing trend.