ICRA says the FAME-II, scheme aimed to push faster EV adoption crossed the halfway mark of its three-year tenure (FY2020-FY2022), on September 30, 2020. However, it has managed to achieve only 2 percent of its target (out of covering 10 lakh e-2Ws) sales during the period.
21 Dec 2020 | 5131 Views | By Autocar Pro News Desk
The demand and volumes of electric two-wheelers have witnessed a very lackadaisical growth in recent years despite the government’s thrust on adoption of electric vehicles. Ratings agency ICRA says that despite an unprecedented demand shock caused by the pandemic, its outlook for the e-2W remains largely unchanged in FY2021 due ...
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The demand and volumes of electric two-wheelers have witnessed a very lackadaisical growth in recent years despite the government’s thrust on adoption of electric vehicles. Ratings agency ICRA says that despite an unprecedented demand shock caused by the pandemic, its outlook for the e-2W remains largely unchanged in FY2021 due to a low-base.
The ratings agency says as per the findings of a nationwide survey of 16 e-2W dealerships in November, the stringent eligibility criteria set for claiming the subsidy under the second phase of Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME-II), have been a deterrent – mainly due to a minimum localisation requirement and exclusion of lead-acid based e-2W for subsidy. In addition, lack of consumer awareness (regarding the government subsidy), low acceptability led by lack of product knowledge and after-sales service concerns have been dominant reasons for the scheme’s lacklustre performance.
ICRA says the FAME-II, scheme aimed to push faster EV adoption crossed the halfway mark of its three-year tenure (FY2020-FY2022), on September 30, 2020. However, it has managed to achieve only 2 percent of its target (out of covering 10 lakh e-2Ws) sales during the period.
Shamsher Dewan, VP, ICRA said, “The e-2Ws segment was expected to witness faster penetration among all segments of the automobile market, given the favourable economics and limited reliance on a widespread charging infrastructure. However, e-2W sales vis-a-vis targets set under FAME II have been tepid so far, with the same constituting less than 1% of total two-wheelers sold in FY2020 in India. While the e-2W sales reported a 21% YoY growth to 1.5 lakh units in FY2020 (first year of scheme) the number of e-2Ws which availed FAME-II subsidy plummeted.”
The company’s research was done to understand the ground realities regarding the current challenges and possible drivers for faster e-2W penetration. The key findings were as under:
“In H1 FY2021, the high-speed e-2W reported a 25% Y-o-Y decline, primarily a result of the pandemic-led lockdowns. However, the sales data released by SMEV for the month of September 2020, which reported a 72% Y-o-Y increase in sales of high-speed e-2W, augments the positive expectations of the dealers. The industry is banking on pent-up demand from H1 FY2021, to get realised in the festive season. Announcement of EV policies by states and union territories like – Delhi, Telangana, and the central government’s decision to allow sale of EVs without battery, could push growth in the near-to-medium term. However, ICRA expects 15-17% YoY contraction in domestic 2W volumes in FY2021, amid an evolving pandemic situation, persisting health concerns and economic uncertainties. In H1 FY2021, the actual 2W wholesale sales volumes were 38% lower on a Y-o-Y basis,” concluded Dewan.
ICRA notes that while the practicality behind the FAME-II policy target of a million electric two-wheelers by FY2022 could be debated at this juncture, the Covid-19 pandemic has been an unpredictable variable which has altered all the best laid out plans. Although the increased preference for personal mobility, to ensure social distancing, bodes well for two-wheeler sales in the near-term, the demand for e-2Ws could be impaired as consumers face income uncertainties.
Nonetheless, the government’s thrust on the adoption of EVs, increasing awareness towards public health and clean energy continue to favour EV adoption in the long run. Multi-level policy support (demand incentives) and policy push (firm transition date) will be imperative for the same.