The Indian government recently announced the Electric Mobility Promotion Scheme 2024 (EMPS), which is expected to significantly increase electric two wheeler prices. The Investment Information and Credit Rating Agency of India Limited (ICRA) has revealed that the fame scheme, which aimed to encourage electric two wheelers, is being discontinued from March 31st. As a result, electric two wheeler prices are anticipated to rise by 10% from April 1st, 2024. This news may come as a shock to those who were planning to purchase an electric two wheeler.
The Ministry of Heavy Industries, Government of India, has allocated Rs. 500 crores for the Electric Mobility Promotion Scheme, which will run for four months from April 1st to July 31st, 2024. This subsidy will range from Rs. 10000/kWh to Rs. 5000/kWh, with a maximum benefit of Rs. 10000 only. ICRA estimates that the payback period for electric two wheelers could be extended to 5.5 years, compared to five years under the FAME 2 framework. Electric vehicle manufacturers are also offering subsidies to customers through this scheme.
The use of electric vehicles is increasing in India due to technological advancements and government initiatives to promote electric vehicles, such as the Production Linked Incentive (PLI) scheme. Currently, electric vehicle usage is 5%. However, ICRA predicts this will rise to 6% to 8% by 2025. The main reason for the increase in the use of electric vehicles is the reduction of fuel costs and the significant decrease in pollution associated with electric vehicles.
New regulations will likely result in a significant increase in the prices of electric two wheelers in India. It remains to be seen whether this will affect the sales of electric two wheelers and whether buyers will still be interested in purchasing electric vehicles despite the higher prices.
