OPINION: Will FAME 2 Subsidy Revisions Actually Make A Difference?

In a bid to accelerate electric vehicle adoption in the country, the Government of India has announced massive revisions to the FAME 2 subsidy scheme. The new policy aims to make electrics more affordable, especially those on the higher side of the pricing spectrum.

Change In Criteria
The most notable change is that the subsidy rate has gone up from Rs 10,000 per kWh to Rs 15,000 per kWh. The scooters will still have to meet the minimum range and top speed criteria of 80km and 40kmph, respectively. Therefore, all low-speed electric scooters will not be eligible for the subsidy.

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How Will It Affect Prices?
Once the above revisions are implemented, expect a sizeable cut in the asking price of electric scooters. For instance, the Ather 450X is the crème de la crème of the electric scooters in India, packing a 2.9kWh battery. With the extra Rs 5,000 subsidy, the asking price of the scooter should technically go down by around Rs 14,500. Hence, the base model should be priced at around Rs 1.12 lakh (ex-showroom Delhi, with extra state subsidy added), while the top-spec variant should retail for Rs 1.35 lakh.

Similarly, the Okinawa Praise Pro, which comes with a 2kWh battery, will now get an extra Rs 10,000 subsidy. This will bring its asking price down to Rs 74,795 (ex-showroom), making it as affordable as the Honda Activa 6G or the TVS Jupiter.

Why Is It A Good Move?
This year has thrown at us the deadly second wave of COVID-19, extended lockdowns, a worsening economy, and ever-increasing fuel prices that have crossed Rs 100 in certain states. Amid all of this, the Fame 2 subsidy revisions should provide a little relief. If you were planning on going electric, this is a good time.

Premium offerings like the Ather 450X, Bajaj Chetak, and TVS iQube Electric will benefit from this scheme, as they will now be priced closer to the Rs 1 lakh mark. Even Revolt’s RV300 and RV400 electric motorcycles will be priced much more competitively.

This will also provide an impetus to companies like Okinawa and Hero Electric to step up their game and offer better quality products to Indian customers. Lastly, with the Ola Scooter, Simple Energy Mark 2, and Hero-Gogoro offerings on the horizon, the market is set to get good quality electrics at relatively affordable prices. And if established two-wheeler giants like Suzuki, Yamaha, and Honda decide to step in, they too will be able to keep prices in check.

What Could’ve Been Better?
Suppose there were provisions in the scheme to further incentivise manufacturing electrics instead of just assembling them in the country. In that case, we think it would’ve gone a long way in boosting EV adoption. Just think about it. If there were a clause that an extra Rs 5,000 per unit of subsidy would be available for every scooter manufactured, then products like the Chetak, iQube, 450X, and the upcoming Ola Scooter would be even more affordable. We would see a significant step-up in quality (and probably more people riding one).

Should You Go Electric?
Heck, yeah! If you need a sign that electrics are the way forward, just go to your nearest fuel bunk and check the fuel prices. And then check the per-unit cost in your electricity bill. Then, do a simple cost analysis and think of the money you could save by going electric.