EV sales double but FAME II remains on the back burner

The government’s push for adoption of electric vehicles (EVs) to control rising pollution and reduce dependency on fuel imports finally seems to be working, as customers are increasingly opting for e-mobility.

According to Society of Manufacturers of Electric Vehicles (SMEV) data, 56,000 units of electric vehicles—including two- and four-wheelers—have been sold so far in India till April 2018. That is a jump of 124% from last year which saw just 25,000 EV units being sold.

“The EV industry has seen a decent leap in FY2017-2018. The numbers indicate that citizens are accepting electric vehicles as an economical as well as a cleaner mode of transportation in comparison to conventional vehicles,” said Sohinder Gill, director general, SMEV.

However, the figure was expected to reach 100,000 had the second phase of the the FAME [Faster Adoption and Manufacturing of Hybrid & Electric Vehicles] India scheme been in place. The scheme is aimed at promoting electric mobility and alternative fuels in the country.

“If FAME II scheme would have come and had the manufacturers started preparing from April, we would have touched 100,000 units of EV sales this fiscal,” Gill told PTI in a statement.

With 54,800 electric two-wheelers and 1,200 electric four-wheelers sold so far, India has shown slow but steady progress towards electric adoption. But in the absence of a comprehensive policy, is it too soon to judge?

India is still far behind any of the countries that have adopted EVs. "It's not a number to gloat on, but at the same time the fact that it has been doubled, I think there is a whole lot of awareness that has come in. But that awareness will gain confidence only when the policy helps in addressing the core issues of electric mobility," said Sridhar V, partner, Grant Thornton India.

“Most of the manufacturers have started using lithium-ion batteries, which has increased the performance of electric two-wheelers and helped in gaining consumer confidence. However, the absence of an adequate finance mechanism, price gap between an electric two-wheeler and petrol two-wheeler, awareness among citizens are challenges which need immediate redressal,” Gill, who is also the CEO of Hero Electric, told Fortune India.

He further went on to say that this year looked positive, especially for the electric two-wheeler segment, and it was expected to perform better while in the four-wheeler segment, lack of infrastructure, and ambiguity over policy were the major deterrents holding the segment back.

It is expected that the sales in the ongoing fiscal year will touch 74,000 units.

"This figure is far below the volume which non-electric two-wheelers have been achieving month-on-month. It's close to about 20 million. That's the replacement that one should be looking at," said Sridhar.

Prime Minister Narendra Modi promised of an EV policy at the first global mobility summit in early September in New Delhi. In his address, he had said: “We will soon put in place a stable policy regime around electric and other alternative fuel vehicles. Policies will be designed as a win-win for all, and enable huge opportunities in the automotive sector.”

However, in a recent notification by the ministry of heavy industries, the government has extended the first phase of FAME India scheme. According to the statement, it has withdrawn the benefits available to conventional battery vehicles. “It has been decided that the period of the FAME-India scheme be further extended for a period of six months up to March 31, 2019 or till notification of FAME-II, whichever is earlier,” the ministry said in a statement.

This is the fourth time the first phase of the FAME India scheme has been extended since its launch in April 2015.