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The electric two-wheeler market saw a significant decline in sales in April 2023, dropping by 24% due to the withdrawal of subsidies.
As per the latest data released by VAHAN, the registrations for electric two-wheelers in India dropped by almost 24% in April 2023. In March 2023, the total registrations were 82,292, while in April 2023, the numbers fell to 62,581. The Indian government's harsh measures to cut down the subsidies offered for electric vehicles (EVs) seem to be a key reason for this drop.
The report highlights that several popular electric two-wheeler brands including TVS, Hero Electric, Ather Energy, and Okinawa witnessed a significant decline in their sales in April. The numbers show that only Ola Electric managed to surpass its March sales with a record high of 21,560 registrations in April.
The decline in registrations for electric two-wheelers comes as a blow to the Indian government's ambitious target of converting 30% of the country's vehicles to electric by 2030. The government had introduced several incentives and subsidies to encourage the adoption of EVs, including lower tax rates, financial incentives, and subsidies for manufacturers.
Month | Sales |
---|---|
January | 64,363 |
February | 65,623 |
March | 82,292 |
April | 62,581 |
The electric two-wheeler market has undergone significant changes in its rankings due to the recent actions taken by the Department of Heavy Industries (DHI) against Hero Electric and Okinawa. The two companies are currently being audited for not meeting the 50% localization criteria, which makes them ineligible for subsidies.
As a result, their combined registrations have plummeted by 43% in April compared to March, and their market share has dropped to just 10%, whereas they controlled around 31% of the market in 2022. This has paved the way for other electric two-wheeler brands to climb up the rankings, with Ampere taking over the third position from Ather.
Meanwhile, the Bajaj Auto and Chetak Technologies combination quietly rose to the top five in April from their sixth position in March. The fallout from the DHI's actions has resulted in a significant shakeup in the electric two-wheeler market, with some brands benefiting while others struggle to keep up.
According to industry estimates, the stalled subsidies due to the localization criteria issue could amount to INR 1,200 crore, with a majority of it claimed by Hero Electric and Okinawa. As these two companies have already paid the subsidy to customers in advance of disbursements, the DHI's punitive action could severely impact their bottom lines and working capital if not challenged.
Responding to the issue, Sohinder Gill, CEO of Hero Electric, stated that while they haven't received any letter from the Department of Heavy Industries yet, they are willing to respond and engage in dialogue to resolve the matter instead of continuing the stalemate that has persisted for the last fifteen months.
Sohinder Gill, CEO of Hero Electric, claims that the electric two-wheeler market leaders who produced large quantities in 2019-21 were severely affected by the lack of a supply chain, which was compounded by the COVID-19 pandemic for two consecutive years in 2020 and 2021. On the other hand, late entrants like Ola, Bajaj, TVS, Kinetic, and Okaya have benefited from the supply chain, which has only started to take off in small numbers.
However, the Department of Heavy Industries (DHI) has not limited its actions to only Hero Electric and Okinawa. It has also stopped providing subsidies to Ather, Ola, TVS, and Hero Motocorp for allegedly charging extra for a charger attachment rather than including it in the ex-factory price. The ex-factory price of electric two-wheelers that qualify for the FAME 2 subsidy is capped at INR 1.5 lakh.
As a result of the subsidy issue, the ranking of electric two-wheeler brands has seen some significant changes. Ampere has replaced Ather in the third position, and the combination of Bajaj Auto and Chetak Technologies has quietly risen to the top five in April from its sixth position in March.
Although the problem is being resolved, the registrations have been negatively impacted. Ather Energy and TVS, who were previously on a roll, have felt the impact. Registrations for Ather dropped by 37% in April to 7,675. TVS' decline has been more pronounced; its registrations dropped by almost 8,718 in April.
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