Corporate India is worried that EV sales may decline by more than 50% if the FAME subsidy is not renewed after March 2024, as there are just three months remaining until it expires. During a panel discussion on Electrifying Mobility, Conventional ICE V/s Ev Innovation Adoption and Promotion at the CII, Arvind Goyal, Chairman of Tata Autocomp Systems, stated that EV sales will see a sharp decline in the absence of government demand support. This will have an impact on component makers and other related industries.
If the government doesn’t make clear what its future regulatory strategy is, the industry is already preparing for an uncertain period of time. “If the government decides to discontinue the subsidies, not one electric bus will be sold in the country,” he stated.
Under the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles in India (FAME-II) programme, the government offers a demand subsidy for electric two-wheelers. The subsidy, which is capped at 15% of the ex-factory price of the vehicles, is Rs 10,000 per kWh. Formerly, the incentive was set at Rs 15,000 per kWh, with a 40% vehicle cost cap.
According to Goyal, Tata Autocomp localised the battery packs, inverter motors, and charging stations while excluding the semiconductors and motor magnets due to the government’s generous incentive programme. While subsidies are vital, the ICE space industry moved from BS IV to BS VI because it was made mandatory and gave the sector time to adjust, according to Arup Basu, Managing Director of Greaves Cotton Ltd.
“The government needs to give the industry some direction, which is lacking. In order to give the business ample time to adjust their plans appropriately, the government should clearly state that it is ending the subsidies if it has no intention of continuing them, Basu continued.
India’s Future EV Market
Nitin Seth, Chief Executive Officer, New Mobility, Reliance Industries, states that subsidies are superfluous if the objective is to safeguard consumers, since the government’s main concern is lowering the cost of acquisition for consumers when they purchase energy.
Speaking at the panel discussion, Seth advised today’s consumers to purchase a 3–4 kWh battery pack scooter with a guarantee of 100+ miles of range when they need to reduce their acquisition costs for use cases that call for a range of less than 40 km through solar-powered EV charging and battery swapping.
Seth predicts that in the event that the government decides not to extend the subsidies, the market would move towards battery swapping, enabling customers with daily mileage of 40–50 km to purchase scooters with smaller batteries and no batteries at all, so reducing his acquisition costs. Reliance Industries has showcased interchangeable and detachable batteries for electric cars (EVs) that can also be used with an inverter to power home appliances.
In response to Seth’s worries, Kinetic Green’s founder and CEO, Sullaja Firodia Motwani, said that although the government has a clear policy in place and that FAME 1 and 2 have created demand, maintaining the subsidies will be essential to reaching critical mass. Battery swapping is a solution that can reduce consumers’ acquisition prices and range anxiety, but Motwani noted that India still lacks the bandwidth required to make this practical.
The Kinetic Green creator claims that although local component manufacturing is well-invested for strong EV growth, demand may be affected beyond March 2024. “The willingness of the industry to invest more will be impacted by the abrupt removal of subsidies as well as customer affordability. The consumer should continue to receive incentives to lower the cost of EVs, the speaker continued.
The key to the EV-to-ICE transition, according to Anand Kulkarni, Chief Product Officer at Tata Passenger Electric Mobility Ltd., is that the cost of an EV should not be more than 30% of that of an ICE vehicle. “The consumer believes that the lower cost of operations through fuel savings will offset this initial high cost,” he stated.
Anand Kulkarni talked about his Nexon EV experience. “When we built the Nexon EV, we wanted to ensure that the premium charged over ICE should not be more than 30%,” he said. “Stability in government policy is necessary for the industry to have a graded approach to make substantial investments happen post-2024,” Kulkarni stated.
Cutting-edge mobility solutions like the Fast DC Charging Gun, e-powertrain products, e-drivetrain, Engine Cooling Solutions, Battery Thermal Management System, and precisely designed suspensions made for future vehicles are all on display at the two-day CII NexGen Mobility Show conference and exhibition.
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