FAME-II subsidy to be reduced for electric two-wheelers from 1 June, 2023

FAME-II subsidy for electric two-wheelers is set to be curtailed from 1 June 2023, according to a recent notification by the Ministry of Heavy Industries, following approval from the Centre. The revised scheme will cap the FAME 2 incentive at 15 per cent of the ex-showroom price of the two-wheeler EV, significantly lower than the current 40 per cent. In simpler terms, the subsidy will be reduced from the current rate of Rs 15,000/kWh to Rs 10,000/kWh.

Electric two-wheeler prices after 1 June, 2023

As a result of the new subsidy allocation, electric two-wheelers are expected to come with a higher price tag. Prospective customers looking to purchase premium electric two-wheelers may have to pay an additional amount of up to Rs 35,000, depending on the model and its respective ex-showroom price. Notably, certain electric scooters, such as the Ola S1 Pro and Ather 450X may cost over Rs 1.50 lakh after 1 June, making them significantly more expensive compared to other e-scooters and internal combustion engine (ICE) scooters.

Brands such as Hero Vida, Ather, Ola, and Tork Motors, which offer models with large battery packs, currently benefit from incentives of approximately Rs 55,000-60,000. However, these incentives will be reduced by more than half with the amended FAME 2 scheme. Consequently, electric two-wheelers, namely the Ola S1, Ather 450X, Tork Kratos, Simple One, Hero Vida V1, TVS iQube, Bajaj Chetak, and others are expected to become considerably more expensive.

FAME-II Scheme Explained

The FAME 2 subsidy scheme was introduced by the central government on 1 April 2019, initially valid until 31 March 2022. However, the scheme was extended to March 2024 in June 2021. In June 2021, the Ministry of Heavy Industries also increased incentives from Rs 10,000/kWh to Rs 15,000/kWh, raising the subsidy cap for electric two-wheelers from 20 per cent to 40 per cent.

The FAME-II scheme had a total budget of Rs 10,000 crore, with Rs 2,000 crore allocated to electric two-wheelers. Almost all of this amount has said to be already been utilised. Furthermore, it has been reported that the government has reallocated an additional and previously unused Rs 1,500 crore, which was originally reserved for electric three-wheelers and four-wheelers under the FAME 2 scheme. However, it remains uncertain whether the Centre will introduce a new phase of FAME after the current scheme concludes on 31 March 2024.

Also read:

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Hero Vida V1 2022 Full Spec

Ola Electric S1 2021 Full Spec

Tork Kratos 2022 Full Spec

TVS iQube 2022 Full Spec

Keyword: FAME-II subsidy to be reduced for electric two-wheelers from 1 June, 2023