'Incentives are making electric two-wheelers affordable'
Post subsidies, electric two-wheelers have just a 10 percent premium over petrol scooters.
The Central Government recently waived registration charges for electric vehicles (EV) to boost sales and encourage e-mobility. In the past two years, both central and state governments have introduced incentives to encourage adoption of electric vehicles, and promote greener technologies.
In June 2021, the central government announced its decision to extend the second phase of the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme by two years. The scheme started in 2019 and was to end by 2022.
Under FAME II, electric two-wheelers (2W) are eligible for a subsidy of up to Rs 20,000 per vehicle, which is calculated at Rs 10,000 per kilowatt hour of the battery. Battery capacity is measured in terms of kilowatt-hours (kWh), and electric scooters use batteries between 1.5 kWh and 2.5 kWh.
"This translates to a subsidy of Rs 15,000 to 25,000, but there is a cap of up to Rs 20,000 that a retail buyer will get under FAME II,” says Rohan Rao, Partner - Industrials and Automotive, KPMG India.
Further, some states have incentives in addition to the Central Government's FAME II incentives. More than 20 states have incentives to promote EV adoption.
For instance, the Maharashtra Government has an additional subsidy of Rs 5000 per kWh. So, a customer in that state who has a subsidy of Rs 20,000 from the central government is eligible for an additional subsidy of Rs. 10,000.
Similarly, the Gujarat Government has a subsidy of Rs 10,000 per kWh over and above the FAME subsidy, while the Delhi Government has Rs 5000 per kWh.
After factoring in the incentives and registration charges waiver, a two-wheeler priced at Rs 1.2 lakh becomes available at a price of Rs 80,000 to Rs 85,000. "This is only a 10 percent premium over a petrol scooter,” Rao notes.
Maharashtra also has an early bird scheme of another Rs 5,000 off if a customer buys a scooter before December 31, 2021.
“With falling battery prices, EV bikes prices are already comparable to their petrol counterparts,” said Revolt Motors, an electric two-wheeler manufacturer, in a regulatory filing.
To incentivise the EV customers, the Central Government has also set the GST slab at its lowest at 5 percent, compared to 28 percent for petrol bikes.
India has more than 80,000 electric two-wheelers, over 20,000 electric three-wheelers, and 1,600 electric four-wheelers, according to the FAME II website.
Alongside, the subsidies for consumers, the Central Government has provided incentives for acceleration of EV adoption. "Under FAME subsidy, Rs 1000 crore has been allocated for setting up charging infrastructure. The government recognises the need to set up charging stations," Rao says.
"Every new commercial and residential building will be mandated to have a certain number of charging stations in proportion to the number of parking slots," he adds.
Edited by Kunal Talgeri