Electric two-wheeler sales remain tepid: Icra

Under the three year tenure of FAME-II scheme -- FY20-FY22-- e-2W sales have been only 2 per cent of the targeted 10 lakh unit sales as on September 30, 2020 halfway mark, Icra said in a statement

New Delhi: Sales of electric two-wheelers (e-2W) in India remains tepid despite government’s subsidy and near-term outlook largely remains unchanged, according to ratings agency Icra. Under the three year tenure of FAME-II scheme — FY20-FY22– e-2W sales have been only 2 per cent of the targeted 10 lakh unit sales as on September 30, 2020 halfway mark, Icra said in a statement.

“The demand and volumes of e-2Ws have witnessed a very lackadaisical growth in recent years despite the government’s thrust on adoption of electric vehicles (EV). Despite an unprecedented demand shock caused by the pandemic, the outlook for the e-2W remains largely unchanged in FY2021 due to a low base,” the ratings agency added.

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Citing a nationwide survey of 16 e-2W dealerships in November, Icra said 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), the Centre’s flagship scheme, 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 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,” it added. The FAME-II, scheme aimed to push faster electric vehicle (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 per cent of its target (out of covering 10 lakh e-2Ws) sales during the period, Icra said.

Commenting on the situation, Icra Vice-President Shamsher Dewan 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-à-vis targets set under FAME II have been tepid so far, with the same constituting less than 1 per cent of total two-wheelers (2W) sold in FY2020 in India. While the e-2W sales reported a 21 per cent year-on-year (YoY) growth to 1.5 lakh units in FY2020 (first year of scheme) the number of e-2Ws which availed FAME-II subsidy plummeted,” he added.

Dewan further said in the first half of FY21, the high-speed e-2W reported a 25 per cent (YoY) 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 per cent YoY increase in sales of high-speed e-2W, augments the positive expectations of the dealers. 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, he added.