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Electric Two-Wheeler Subsidies Drop, Price Hikes Begin



1/ 2nd phase of the FAME-II scheme in India reduced subsidies for electric two-wheelers (E2Ws). The amount now stands at Rs 10,000 per kWh (from Rs 15,000) with a maximum cap of 15% (from 20%) of the ex-factory price. ๐Ÿ’ฐ

2/ As a result, companies like Ola Electric, Ather Energy etc. increased the E2Ws prices. ๐Ÿ’ธ

3/ Price hike ranges from Rs 8,000 to Rs 30,000, affecting popular models like Ola S1, Ather 450X, & Matter Energy's electric bikes. ๐Ÿ’ฐ

3.1/ Ola S1 price increase by ~ Rs. 15,000 ๐Ÿ’ฐ

3.2/ Matter Energy price increase by ~ Rs. 30,000 ๐Ÿ’ฐ

3.3/ Ather Energy product price increase by ~ Rs. 8,000 ๐Ÿ’ฐ

3.4/ TVS Motors product price increase by ~ Rs. 17,000 - Rs. 22,000 ๐Ÿ’ฐ

3.5/ Ampere EV product price increase by ~ Rs. 29,000 - Rs. 39,100 ๐Ÿ’ฐ

4/ However, Hero Electric stands out with its decision to not increase the prices of its e-scooter models. โœ…

5/ Price revisions are expected to have a marginal impact on sales growth, with potential pressure on volumes in the next few months. ๐Ÿ“‰

6/ CRISIL estimates a price increase of Rs 20,000 to Rs 25,000 for a vehicle priced at Rs 1.5 lakh, leading to higher down payments and slightly increased consumer EMIs. ๐Ÿ’ธ


Price Change Impact:

1/ Revised subsidies came into force on June 1, significantly hitting EV 2W makersโ€™ margins, leading to price hikes. ๐Ÿ’ฅ

2/ Interestingly, Ather's CFO observed that the subsidy hit is as high as Rs 32k per unit sold. For now, it has only raised prices by Rs 8k, absorbing a "huge chunk". While Hero Electric chose not to raise prices but rather absorb the whole subsidy reduction. โœจ

3/ While a 15-20% price hike sounds like a big deal, it may really not be so. In the last 3yrs, entry-level Splendor, accounting for ~95% of sales, has seen prices surge by ~20%! This is massive, especially given that this country's bottom of the pyramid buys Splendor. EV 2W buyers are not at the bottom of the pyramid because they are sold at more than Rs. 1L price point. This also means these are people with comparatively higher purchasing power, and therefore, the price hikes by EV players will surely not have a sizeable impact. ๐Ÿ’ฅ


Country: India ๐Ÿ‡ฎ๐Ÿ‡ณ

Company: Multiple ๐Ÿข

Industry: Automotive ๐Ÿšฒ

Cost Element: Sales Revenue ๐Ÿ’ฐ


Source: June 1, 2023 | MoneyControl | https://www.moneycontrol.com/news/business/fame-ii-subsidy-impact-ola-increases-prices-others-e2w-players-expected-to-follow-10723001.html





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