EV adoption up against a roadblock on recent govt moves, says automotive body

These measures, including withholding subsidies, demanding retrospective clawback of subsidy given in 2019 and de-listing companies from the National Automotive Board (NAB) portal could impact sales of electric two-wheelers, the Society of Manufacturers of Electric Vehicles (SMEV) wrote in a letter to Niti Aayog vice chairperson Suman Bery.

“This has created a state of disequilibrium in the market given that there is no more a level playing field in the automotive sector. The MHl’s decision to blockade subsidy flow to OEMs has seen the demise of existing market leaders at the expense of legacy players,” the SMEV claimed.

Startups are being “punished,” with four of the top EV producers since 2018- 2020 being now relegated to the bottom four, the automotive body said.

Last month, ET reported that the MHI had cut the number of beneficiary two-wheelers under the Faster Adoption and Manufacturing of Electric (and hybrid) vehicles in India phase-II (FAME-II) scheme from around 989,000 to just under 564,000. The scheme was projected to subsidise 1 million electric two-wheelers by April 2024.

This was done following a probe by the Automotive Research Association of India (ARAI), which found that nearly every second electric two-wheeler sold under the Centre’s ambitious Rs 10,000-crore EV promotion scheme was sold with false localisation claims.

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“We have proposed to the government through the finance ministry that a 10% green tax on polluting two-wheelers could offer some balance to the field. But this is not enough. The original equipment manufacturers (OEMs) are doddering under the weight of the triple whammy of subsidy blockades, claw back notices and an embargo on future sales under FAME,” the SMEV letter said.SMEV members include Hero Electric Vehicles Pvt Ltd, Bosch, Okinawa Autotech, Micromax Electric, Yulu Bikes and Greaves Electric Mobility.

The government had withheld subsidies of approximately Rs 1,400 crore for over 4 lakh electric two-wheelers sold under the scheme since April 2022, but had continued adding these units to its official tally pending investigation. Now, it has removed these units from its tally, ET had reported earlier.

Effective June 1, the demand incentive for electric two-wheelers was reduced to Rs 10,000 per kWh from Rs 15,000 per kWh. The cap on incentives for electric two-wheelers was also reduced to 15% of the ex-factory price of vehicles from 40% earlier.