EV Simplified: What Is The Whole FAME-II Mumbo Jumbo?

You must have heard of the FAME-II subsidy offered by the Government of India. This is the same subsidy responsible for heavy 'discounts' on your favourite EVs, leading to faster adoption. After all, the name 'FAME II' is short for 'Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India'.

In this report, we dive into the nitty-gritty to give you an idea of how exactly FAME-II subsidies work.

The What

FAME-II subsidy is a type of benefit introduced by the government to accelerate the switch to electric vehicles and reduce the overall carbon footprint produced by automobiles. While the benefit became popular only last year, it was actually introduced back in 2019. Of course, the EV market was still fledgling at that time.

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Initially, the FAME-II benefits were set at Rs 10,000/kWh of battery capacity, but as the EV space flourished, the government upped the benefits by 50 percent to Rs 15,000/kWh from June 2021.

The How

So what does Rs 15,000/kWh mean? Well, consider the Ather 450 Plus. It has an ex-showroom Delhi price of Rs 1,71,520, and its battery capacity is 2.9kWh. So, with the FAME-II subsidy, the Indian government pays Rs 43,500 (Rs 15,000 x 2.9kWh) to the company, bringing the cost to Rs 1,28,020.

Remember that FAME-II subsidies are discounted during purchase, meaning there's no manual reimbursement, per se, happening.

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Apart from this, various states also offer their own subsidies to promulgate EVs and boost adoption. However, unlike FAME-II benefits, this subsidy is reimbursed to the customer later on. This is why the Ather 450 Plus' final price in Delhi comes down to Rs 1,13,520 (after deducting FAME-II benefits and the Rs 14,500 state subsidy). Similarly, popular EVs like the TVS iQube Electric, Ola S1, and the Ather 450X get heavy discounts. However, please note that only a select few states offer individual subsidies.

The Indian automobile buyer has always been price-sensitive, and the EV buyer is no different. Because of this, such massive subsidies are welcome benefits, considering they help not only the customers but also allow manufacturers to sell more electric two-wheelers.