Electric 2-wheeler cos hit a ₹1kcr bump

Sales in the local market fell to 59,554 units from 76,162 units in November, according to data from the Vahan portal of the Ministry of Road, Transport & Highways. With sales during the April-December period totalling only around half a million units, senior industry executives expect the volume for the fiscal year ending March to miss the Niti Aayog’s target of a million electric two-wheelers by 20-30%.

Also, the number next fiscal year could fall short of the industry estimate of 2 million units unless the stalled incentives are cleared, as strained cash flows have begun disrupting operations at several manufacturers, they said.

“Multiple factors have contributed to the sales curve falling in the last two months of the year, the foremost being the blockage of Rs 1,100 crore subsidy to the majority of players for many months, which has squeezed the working capital of major OEMs (original equipment manufacturers),” Society of Manufacturers of Electric Vehicles director-general Sohinder Gill said. Gill is also the chief executive of Hero Electric.

Subsidy payments were to be made under FAME-II (Faster Adoption and Manufacturing of Electric Vehicles), which is the government’s flagship incentive scheme aimed at boosting manufacturing and sales of electric vehicles. The government stopped releasing payments since April 2022 due to alleged violations of the local value addition criteria under the scheme. Apart from Hero Electric and Okinawa Autotech, Revolt, Okoye, Ampere and Jitendra EV are the other affected companies, said industry insiders.

Even as a probe is underway to ascertain these irregularities, companies said the stoppage of payments was hurting their cash flows as they had already passed on the benefits to customers. “If not resolved quickly, this slowdown may have a negative impact on volumes next fiscal, when the industry is looking at selling more than 2 million units,” Gill said.

The government offers an incentive of Rs 15,000 per kWh on electric two-wheelers, capped at 40% of the total vehicle cost, provided they meet specified localisation criteria. The incentive is accounted for in the retail price of the vehicles and the government reimburses the manufacturers within 45-90 days on the submission of proof of sale.
The government on its part has said that it did not intend to penalise electric vehicle makers but wanted to promote the development of an ecosystem for EVs in the country. It has directed testing agencies International Centre for Automotive Technology and Automotive Research Association of India to relook the eligibility criteria and certify companies for claiming incentives under FAME-II.