Electric scooters can be more expensive than Rs. 45,000 in India as FAME offers discount: Crisis

With the sharp increase in electric two-wheeler adoption, which is translating into strong sales by e-two-wheeler companies, there is also the possibility of electric motorcycles, the Crisil report said. should be Rs 45,000 more expensive by fiscal 2025, the Crisil report said. offset by the Production Linked Incentive (PLI) for EVs.

The application is fast EVs is now likely to continue due to better cost economy, availability of multiple models, and feasibility of home charging options.

The sentiment is reflected in the rapid turnover of electric two-wheeler companies. WardWizard, the manufacturer of an electronic two-wheeled vehicle called Joy e-bike, registered sales of 4,450 of these vehicles in February 2022, by recording a strong growth of 1,290% compared to February 2021 when the company sold 320 electric two-wheelers, due to high domestic demand.

In the current financial year (April to February 2022), the company surpassed the 25,000 sales mark. Another player, Electric hero is the first in the industry to develop and launch the first lithium-ion battery-powered e-scooters in India and already has more than 4.5 lakh electric two-wheelers on the road.

Total sales of electric two-wheelers, including both high- and low-speed, for the 12-month period (January-December) 2021 increased by 132% compared with the corresponding 2020.

However, Crisil The report highlights that EV penetration is mainly driven by subsidies, especially the faster Hybrid and Electric Vehicle (FAME) Adoption and Production (FAME) program under the National Electric Mobility Mission Plan. and subsidies provided by the various states. The report notes that these incentives have closed the gap between the cost of buying a traditional internal combustion engine (ICE) vehicle and the cost of buying an electric vehicle.

From 60-65% of total spending in FAME’s first phase, incentives increased to 85% in FAME’s second phase. Over the past five fiscal years, subsidies have fueled rapid electric vehicle sales (more than 20% year-over-year growth in most segments) on a low basis for fiscal 2017 and despite the pandemic, Crisil’s analysis shows. Thanks to the FAME incentive, the total cost of acquisition (TCA) of electric motorcycles will be lower than that of ICE variants 7,500-9,500 rupees in fiscal year 2022 and fiscal year 2023. As sales are expected to increase spike in the next few years, the FAME II subsidy is expected to run out in fiscal year 2023, compared with the government’s deadline a year later.

According to Crisil, this means that in fiscal year 2025, electric scooters could become Rs 45,000 more expensive than in FY 2023 (FAME allowance Rs 45,000 and registration offer Rs 10,000, even if the advantage is to take advantage of this). enough scale to reduce car prices). TCA is also expected to increase by Rs 18,000-20,000 between 2023 and 2025, considering a 25% reduction in vehicle costs (plus registration and insurance costs). This will result in a higher TCA of electric scooters compared to ICE variants, which could affect penetration, although this could be offset somewhat if electric two-wheeler manufacturers split it up. share the benefits of PLI with customers.

As the FAME incentives dry up – potentially in fiscal 2024 – the PLI scheme could spur EV adoption. The latest PLI scheme for electric and hydrogen fuel cell vehicles, which aims to boost India’s production capacity for innovative products for the fish year starting from 2023, has been reported, the report shows. could limit any sharp increase in TCA and keep it at the ICE variant level, the report found.

So as FAME II goes into the sunset, PLI can step in to support demand and then spur manufacturers to invest in capacity building. As an example, an electric scooter has an ex-factory price of up to Rs 1.4 lakh (without FAME offer) and an on-road price of Rs 1,04 lakh (with FAME offer and incl. registration, insurance and other expenses) can get incentives up to Rs 17,000/car for the duration of the PLI program. This is about 10-12% of the ex-works cost of the electric scooter.

In addition, the TCA of electric motorcycles could be similar to the ICE variants if 75% of the expected PLI benefits are passed on to the customer. In a scenario where 100% of the PLI benefits are passed on to the buyer, the TCA of the electric scooter will be Rs 1,000 lower than that of the ICE variants.

Overall, the PLI plan is expected to boost the adoption of electric motorcycles, due to a wider range of models and significantly lower prices. Thus, vehicle manufacturers will have enough incentive to invest in the production of electric motorcycles, which will boost supply.

The motorcycle segment will also be eligible for PLI benefits, once the FAME II offer expires, TCA is expected to raise Rs 15,000 from FY 2023 to FY 2025. However, limited models and higher prices will still be a hindrance compared to electric motorbikes.