1094879 SIP myths you must know!
Most auto companies have announced an increase in prices of electric 2-wheelers as subsidy on these vehicles has seen a reduction with New FAME structure kicking in from today.
The prices of electric two-wheelers have increased starting from Thursday. The government has reduced the subsidy provided on electric vehicles (EVs), which came into effect on June 1. Now, subsidies will be provided based on the rate of Rs 10,000 per kilowatt-hour (kWh), whereas earlier it used to be Rs 15,000 per kWh earlier. Along with that, the limit of incentives provided on electric two-wheelers has also been reduced from 40% to 15% of the ex-factory price. Due to this step by the government, the premium electric two-wheelers’ prices have increased from INR 20,000 up to INR 35,000.
In fact, the government is bringing changes to the financial incentives given to the electric two-wheeler industry, and the subsidy cut is part of this policy. The Ministry of Heavy Industries announced this on May 21.
Companies that increased the prices:
Ola Electric has increased the prices of all its scooters by INR 15,000. Ola Electric holds a 28% market share in the e-two-wheeler segment. According to media reports, the price of Ola’s S1 Pro has increased from INR 1,25,000 to INR 1,40,000, while the price of S1 has increased from INR 1,15,000 to INR 1,30,000. Electric bike manufacturer Hero Electric has not announced any price hikes yet.
Why was the subsidy reduced?
Approximately INR 2,000 crores allocated under the FAME-II (Faster Adoption and Manufacturing of Electric Vehicles Phase II) scheme for electric two-wheelers has been utilized. To ensure that the support provided as subsidies does not end abruptly, does not have a negative impact on the industry, and for the industry to stand on its own, the Ministry has decided to allocate an additional INR 1,500 crores from the unutilized funds earmarked for four-wheelers and three-wheelers under the FAME-II scheme to electric two-wheelers. The government believes that ultimately the industry will have to stand on its own and, therefore, it is reducing the subsidies, bringing policy changes, and reducing its financial burden.