Attention! Electric Two-wheelers To Get Costlier Soon! Fame II Subsidy To Be Reduced

The subsidy benefit will now be Rs 10,000 per kWh, down from Rs 15,000 per kWh

The prices for electric two-wheelers are set to rise as the subsidies are to be reduced across states. The Central government has decided to reduce the FAME II (Faster Adoption and Manufacturing of Electric Vehicles) subsidies for electric two-wheelers, resulting in a steep rise in the prices of EV two-wheelers.

Up until now, the subsidy was either Rs 15,000 per Kwh or a maximum cap of 40 percent of the ex-factory price of the vehicle. As per the new subsidy, it will be either Rs 10,000 per kWh or a maximum cap of 15 per cent ex-factory price (whichever is lower). Check out the old and new battery capacity-based incentives on major EV two-wheelers below:

As mentioned before, this is just an indication of the battery-capacity-based incentive, although the new cap of 15 percent, which has been reduced from 40 percent (from the vehicle’s ex-factory price) will make the EVs even more expensive. For example, the Ola S1 Pro, after Fame II will cost around Rs 1,60,017, whereas at present it costs Rs 1,24,999, a difference of Rs 35,000. We will get to know the actual prices soon, and they will be quite higher than the current prices. 

The reason for this move is that the government has already disbursed subsidies to around 80 percent of the targeted one million E2Ws on the scheme. The new subsidy rates will be applicable in the next 15-20 days. That said, this step is quite important as it would extend the support from the government. Moreover, the Fame II subsidies are valid till March 31, 2024 and what were to happen next was unclear. However, with this decision, it will soften the blow, compared to completely discontinuing the subsidies next year.

Lastly, while the steep increase in price will affect the sales of the EV two-wheelers in the short term, it will encourage major brands to not be dependent on subsidies, and streamline their supply chain management to design and develop completely localised EVs.