E-2Ws saw 2% of Target Sales till September 2020, Under FAME-II: ICRA

E-2Ws saw 2% of Target Sales till September 2020, Under FAME-II: ICRA

ICRA surveyed 16 electric 2 wheeler dealerships, across the country, in November 2020. The Report tells about how the second phase of Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME-II), the flagship scheme of the Government of India to push faster electric vehicle (EV) adoption, managed to achieve only 2 percent of its target of covering ten lakh electric two-wheeler (E-2W) sales till September 30, 2020. However, it crossed the halfway mark of its three-year tenure (FY2020-FY2022). 

Among all segments of the automobile market, E-2Ws were expected to witness faster penetration, given the favorable economics and limited reliance on widespread charging infrastructure. However, FAME-II has been tepid so far, with E-2W constituting less than 1 percent of total two-wheelers (2W) sold in FY2020 in India. 

The E-2Ws constitute 95 percent of the total EVs on road in India. Between FY2016-FY2020, the E-2W sales grew a CAGR of 66 percent, even if on a low base. In FY2020, FAME-II was announced for a period of 3 years. While the E-2W sales reported a 21 percent year over year(YoY) growth to 1.5 lakh units in FY2020(first year of the scheme) under FAME-II

According to the survey, FAME-II the target E-2W sales (FY2020-FY2022) is 1,000,000, and only 21,651 of E-2W sales achieved from April 2019 to September 2020. 

The possible reasons for such unpleasant results could be

Rigorous eligibility criteria for claiming subsidy, as FAME-II only considers the E-2Ws having Advance -Lithium-ion battery type with an approximate battery capacity of 2 kWh and maximum Ex-factory price of Rs. 1.5 lakhs. 

This excludes the E-2Ws with Conventional Lead-Acid Battery of lesser approximate battery capacity and cheaper in total upfront cost. 

Another reason seems to be the lack of awareness amongst consumers regarding E-2W features and available demand incentives provided by the original equipment manufacturers and the Government. This includes consumer concerns about a range of E-2W, charging infrastructure requirements, after-sale service, upfront demand incentives, benefits of E-2W that must have not reached consumers. 

Consequently, nearly 80 percent of E-2W dealers commented that sales have been negatively impacted under the FAME-II eligibility criteria. 

In H1 FY2021, the high-speed e-2W reported a 25% YoY decline, primarily a result of the pandemic-led lockdowns. Subsequently, there will be an impact of the 16-18 percent contraction in wholesale 2W volumes in FY2021, amid pandemic and economic uncertainties. In H1 FY2021, the actual 2W wholesale sales volumes were 38 percent lower, according to ICRA. 

However, States and Union Territories like, Delhi, Telangana, and the Central Government’s announced their decision to allow the sale of EVs without battery which could push growth in the near-to-medium term.

India is the largest 2W market in the world (by volumes), yet, the E-2V diffusion in the market has remained marginal. The On-road EVs in India remains limited at around 0.5 million only. 

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Bhoomika Singh

Bhoomika is a science graduate, with a strong interest in seeing how technology can impact the environment. She loves covering the intersection of technology, environment, and the positive impact it can have on the world accordingly.