Discontinuation of FAME subsidy beyond March may impact EV 2W growth by 1-2 years: Tarun Mehta CEO Ather

Mehta says the subsidy is needed for a few more years, before it is gradually tapered off.

By Amit Vijay M and Ketan Thakkar calendar 11 Jan 2024 Views icon10256 Views Share - Share to Facebook Share to Twitter Share to LinkedIn Share to Whatsapp
Discontinuation of FAME subsidy beyond March may impact EV 2W growth by 1-2 years: Tarun Mehta CEO Ather

Tarun Mehta, CEO an Co-founder of Ather Energy – the third largest electric two-wheeler maker says the FAME subsidy should continue and it is necessary for a few more years before it can be gradually reduced.

He says a sudden reduction of subsidy has already cost Ather Energy one year’s growth in 2023 and he fears that if the subsidy is discontinued beyond March, then another one or two years of growth for the industry.  

Speaking at the Seminar on EV Manufacturing at the 10th Global Summit of Vibrant Gujarat, Mehta said, the industry loses subsidy, it has to catch up.

“We finished calendar 23 with the same volume as what we began the calendar with. If things had gone to plan, we would have at least doubled that. So, we lost 1 year of growth,” he explained.  

The FAME II scheme, with an outlay of Rs 10,000 crore, was initially rolled out for three years ending in 2022 but was later extended till March 2024. 

In June 2023, the government had slashed the subsidy for electric two-wheelers under the scheme by Rs 5,000 to Rs 10,000 per kWh and reduced the cap on incentives for two-wheelers to 15% of the ex-factory price of vehicles from 40%. 

The subsidy was reduced after the funds envisaged for the two-wheeler segment were exhausted. The government had also revised the scheme outlay for electric two-wheelers to Rs 3,500 crore from Rs 2,000 crore to continue the subsidy.

The CEO of Ather Energy believes that the industry is no longer in a place where if you 'pull off' subsidy, 'everyone will die,' however, 'if the subsidy stops early in April, we will all tighten up our belts and work hard, but then yet again there will be 1 or 2 more years of no growth, which is just pushing us back in our target,' added Mehta.

Earlier in the day, Sullaja Firodia Motwani, the Vice Chairperson of Kinetic Green and Chairperson of FICCI's Mobility Forum said that demand incentives are needed for at least 5 years till the EV penetration does not reach 20-25 per cent 

“At the penetration level of 20-25 percent there will be a momentum, which will ensure the sector stands on its own without any support,” added Motwani.

Also read
India could potentially sell over 10-12 million two wheelers by 2028 says Tarun Mehta, CEO Ather Energy

Sulajja Firodia Motwani bats for five-year 'demand-generation scheme' to maintain EV momentum


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