Electric two-wheeler sales plunge as incentives fade

Registrations of electric two-wheelers fell 4.1% to 42,121 units in June from 43,919 units in the year earlier, according to data from the government’s Vahan dashboard. Sales plunged 60% in June from May, when sales rose to a record high of more than 100,000 registrations.

Ola Electric dominated electric two-wheeler sales in June, selling 16,322 units, giving it a 38.7% market share. TVS Motor Co. followed with 6,844 units and a 16.25% share, while Ather Energy sold 4,191 units and a 10% share. Bajaj Auto accounted for sales of 2,672 units, and Okinawa Autotech sold 2,475 units. However, all leading electric two-wheeler makers reported sharp sales declines in June from the preceding month.

To be sure, electric two-wheeler makers expected sales to slow in June as many customers advanced purchases in anticipation that prices would rise because of lower government subsidies from 1 June. On average, electric two-wheelers in June cost ₹15,000-30,000 more than in May as the government slashed subsidy support on electric two-wheelers to ₹10,000 per kilowatt hour and capped it to ₹22,500 per vehicle, from ₹15,000 per kilowatt hour subsidy capped at ₹60,000 or 40% of the ex-showroom price of a vehicle.

This was done as the government was close to exhausting its entire corpus for subsidizing electric scooters by FY24, a number it was close to achieving till it rejected incentives for scooters it found to have failed to meet the FAME-II eligibility criteria.

Brokerage Elara Capital expects the adoption of electric two-wheelers to reach 7% by FY25 with lower government subsidies, compared with the 9% projected if incentives were reduced a year later.

Without government subsidies, the price gap between electric scooters and their traditional ones widens for customers.

“The performance of the e-two-wheeler segment improved on the back of pre-buying in May,” said Jay Kale, an analyst at Elara Capital. “We expected this to moderate significantly in June and then gradually normalize over the balance months of FY24. We believe the industry will have to be ready to live in a world of reduced subsidies or no FAME-II subsidies. We expect the industry to launch lower-specification versions of electric two-wheelers to counter price increase.”

Mint had earlier reported that popular models were in high demand towards the end of May, resulting in dealers selling out their inventories. Ather Energy, for example, ran extensive ad campaigns encouraging customers to buy or book vehicles at old prices before 1 June, while others such as Ola Electric allowed customers to book vehicles at old prices till 30 May.

“All vehicles were sold out. We saw a huge boost in sales because of the FAME-II subsidy going down. We were not promoting anything, but still found ourselves stocked out before the end of the month,” said Achal A. Gandhi, managing director of AK Gandhi Auto Pvt. Ltd, a TVS Motor dealer in Maharashtra.

Updated: 30 Jun 2023, 11:56 PM IST