What's draining the juice out of electric two-wheeler makers' battery

Sales of electric two-wheelers (e2Ws) have declined by about 400 units a day in the first quarter of this financial year, according to ET Auto. The report notes that apart from Ola, Ather, and Bajaj Auto, most e2W manufacturers sold fewer units compared to the same period last year.

Hero Electric sold fewer than 1,000 units in the June quarter, down from 6,000 a year ago, while Okinawa sold just 1,400 units versus 8,000. Ampere did not reach the 500 mark, compared to 19,000 units last year. Even TVS Motor's sales dropped to 30,000 units from 35,000 last year.

Quoting industry watchers, ET Auto said that the outlook for sales remains the same in the current quarter despite the expectations of the rollout of FAME 3. Any uptick is anticipated in the second half of this fiscal year.

“A lot of buying happened in March since the FAME II regime was coming to an end by March 31 and subsidy amounts were lower under the new scheme, which began from April 1. The contraction was largely on expected lines,” an official from an e2W OEM told ET Auto.

Some, however, are optimistic. Uday Narang, Founder of Omega Seiki Mobility, said the slowdown could extend into the first half of the current quarter but "there should be more clarity and numbers will pick up in H2."

Kaushik Madhavan, VP & Global Head - Mobility Advisory at MarketsandMarkets, said the sales downtrend in e2Ws "is a very short blip" and the top OEMs are already taking several measures which would aid recovery.

What's causing the slowdown?
According to an official of an OEM whose sales have shrunk, policy flip-flops and continued supply chain issues are the reasons behind the fall in sales. "One of the biggest raw materials in EVs is battery cells, which have to be imported from China. It is difficult to depend on Chinese OEMs because of lax quality control, pricing issues, and supply constraints. For example, the February-April period is the biggest sales period for Indian OEMs, but Chinese suppliers go into a shutdown due to the Chinese New Year in March. Manufacturing is starting for key raw materials in India, but reaching scale will take some time," the person told ET Auto.

Several OEMs have also faced working capital issues due to subsidy misappropriation allegations and legal problems, leading to a significant drop in sales.

FAME III Expectations
Under the second iteration of the Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme, OEMs were permitted to claim specified subsidy amounts on the sale of e2Ws. After FAME II ended, the government introduced the Electric Mobility Promotion Scheme (EMPS), where the maximum subsidy for e2Ws was lower than in FAME II, at INR 10,000.

Now, the government is expected to roll out FAME III during the budget session. However, FAME III is expected to focus on electric three-wheelers and commercial vehicles.

A person involved in the discussions on FAME III claimed that e2Ws are not on the agenda of FAME III.

Another person said that the new scheme will have less support for electric two-wheelers.