Lukewarm electric-2W sales despite subsidy

New Delhi: Sales of electric two-wheelers (e-2W) in India remains tepid despite government's subsidy and near-term outlook largely remains unchanged, according to ratings agency Icra.

Under the three-year tenure of FAME-II scheme - FY20-FY22- e-2W sales have been only 2 per cent of the targeted 10 lakh unit sales as on September 30, 2020 halfway mark, Icra said in a statement.

"The demand and volumes of e-2Ws have witnessed a very lackadaisical growth in recent years despite the government's thrust on adoption of electric vehicles (EV). Despite an unprecedented demand shock caused by the pandemic, the outlook for the e-2W remains largely unchanged in FY2021 due to a low base," the ratings agency added.

Citing a nationwide survey of 16 e-2W dealerships in November, Icra said the stringent eligibility criteria set for claiming the subsidy under the second phase of Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME-II), the Centre's flagship scheme, have been a deterrent – mainly due to a minimum localisation requirement and exclusion of lead-acid based e-2W for subsidy.

"In addition, lack of consumer awareness (regarding government subsidy), low acceptability led by lack of product knowledge and after-sales service concerns have been dominant reasons for the scheme's lacklustre performance," it added.

The FAME-II, scheme aimed to push faster electric vehicle (EV) adoption crossed the halfway mark of its three-year tenure (FY2020-FY2022), on September 30, 2020. However, it has managed to achieve only 2 per cent of its target (out of covering 10 lakh e-2Ws) sales during the period, Icra said.