This decline in sales of electric two wheelers could be due to a significant price hike in view of reduced FAME-II subsidy implemented from June 1, 2023
The electric two wheeler segment was at its zenith over the past several months. However, market analysts and experts estimate that this euphoria is about to crash, the main reason being roll back of FAME II Subsides by the Government of India which in turn has led to automakers hiking prices.
This estimation comes from viewing the Vahaan data that shows a distinct 60 percent decline in sales for June 2023. The market for electric two wheelers has grown from under 2,000 units in 2013 and ended FY23 with 7.4 lakh units as against the target of 1 million units. Sales figures have dipped to 35,464 units as on 26th June 2023 as against 1,05,000 units sold in May 2023, marking a 57 percent MoM increase when compared to April 2023, which saw 66,724 units sold.
Electric Two Wheeler Sales Decline June 2023
Electric two wheeler sales have scaled to new heights over the past 5 years and were set to carry on with the same tempo. Rising petrol and diesel prices coupled with the cost effective nature of electric powered two wheelers was what drew buyers to its fold.
However, from 1st June 2023, the Government of India decided to roll back FAME II subsidies from 40 percent to 15 percent which has had an adverse effect on the segment. This roll back has led to an increase in prices of two wheelers by Rs 15,000-35,000 and now the outlook for the future seems dim with sales figures likely to dip back to 2022 levels when sales stood between 40,000-45,000 units each month.
Though market studies and analysts claim that sales could rise once customers absorb these rising prices, the next few months running up to the festive season could prove difficult. As earlier estimation of a two million E2W sales target now seems highly unlikely.
Electric Two Wheeler – Lower Sales, Price Hike
Following the recent modifications in FAME II subsidies, every electric two wheeler manufacturer has had to resort to higher prices. This has brought about significantly lower sales. Ola Electric, a leading electric two wheeler manufacturer, has seen sales in June 2023 dip to 14,073 units from 28,612 units for May 2023 and 22,024 units sold in April 2023.
Hero Electric sales also fell to 970 units in Jun 2023 as against 6,486 units sold in June 2022. TVS Motors, that currently sells the iQube in this segment, also reported MoM sales de-growth to 5,253 units in June 2023 as compared to 20,396 units in May 2023. It was the same with both Ather and Ampere, each of which registered significant sales decline in June 2023. Bajaj Auto sales of the Chetak electric also dipped to 2,100 units in June 2023 from 10,063 units sold in May 2023.
The only solution to this problem facing the entire electric two wheeler segment is that the Government recalibrates its strategies and brings about a more conducive environment if the targets of sales and a boom across the EV industry is expected. It is only with Government support that the industry can move ahead towards a cleaner and greener future.
