FAME II Revision: 21% average price hike by E2W OEMs and over 55% decline in sales in June 2023

On May 19, 2023, the government announced reduction in FAME-II subsidy on electric two wheelers registered on or after June 1, 2023. For electric two wheelers, the demand incentive is now INR 10,000/kWh which was earlier INR 15,000/kWh. Furthermore, the incentive cap has been scaled down from 40% (before June 1, 2023) of the E2W’s ex-factory price to 15%.

Table 1: Ex-showroom Price comparison after FAME-II subsidy revision

Models

Before June 1, 2023 (ex-showroom)

From June 1,2023 (ex-showroom)

Ola S1

99,999

1,14,999

Ola S1 Pro

1,24,999

1,39,999

Matter AERA

1,43,999

1,73,999

Ather 450X

1,57,000

1,65,000

TVS iQube

98,564

1,23,776

Ampere Primus

1,09,900

1,46,355

Ampere Magnus

77,249

1,04,900

Okaya Freedum LI-2

69,999

74,899

Okaya Faast

1,14,000

1,39,951

Okaya Faast F2T

89,000

1,07,923

Bajaj Chetak

1,22,000

1,44,000

Hop Leo HS

75,000

97,504

Hop Leo LS

65,000

84,360

Hop Lyf

65,000

75,000

Source: JMK Research

Figure 1:  Sales drop vs price hike of key OEMs post FAME II subsidy revision

Source: JMK Research

Some key market observations are:

  • Greaves Cotton-owned Ampere EV has increased the prices of its products by INR21,000-INR 39,100 post subsidy revision. The company has increased the price of its models Primus by 33% and Magnus by 36% which is the maximum amongst all major players in the market.
  • Jaipur-based electric vehicle start-up Hop Electric also announced a 30% price hike on their electric scooters.
  • Post the price increase, Ola S1 and S1 Pro are now costlier by 15% and 13% respectively. Ola Electric could sell only 17,552 units in June-2023 which is a decline of 38% from May-2023 sales.
  • The 26% hike in price of TVS iQube brought down the m-o-m sales by 62%.
  • The June sales of Bajaj Auto’s Chetak saw the worst decline of 73% with a price hike of 18%.
  • Hero Electric and Okinawa Autotech are the only companies that have decided not to increase the prices of its e-scooter models. However, the latter increased the price of its E2W models in December 2022 by almost INR 64,000 which can be a potential reason of not doing the price hike again post subsidy revision.

The steep price hike came as a jolt to the highly price sensitive market of Indian electric two-wheeler consumers. The low sales figures in the month of June for almost every brand have shown the same.

In June 2023, the retail sales of high-speed electric two-wheelers (HS E2Ws) in India amounted to 45,734 units which is a significant month-on-month (m-o-m) decline of over 55%. Due to the revised FAME-II subsidy, commuters might look for ICE counterparts and low speed E2Ws. June 2023 was clearly a worrisome month for E2Ws. But with just one month passed after FAME-II subsidy revision, it will not be fair to come on conclusions. Sales over next few months will show a clear picture of the consumers reaction to a steep rise in cost of EVs and the impact on earning of the EV OEMs. Moreover, with FAME subsidies ending by Mar 2024, the impact of recent subsidy revision on sales could be a precursor to what is yet to come in FY2025.

FAME-II: Government of India approved Phase-II of FAME Scheme with an outlay of INR 10,000 Crore for a period of 3 years commencing from 1st April 2019. The FAME scheme provides financial incentives to promote EV adoption in India.