Click it and Unblock the Notifications
Hero, Okinawa, Ampere, And Many Other EV Makers Hit By Rs 9,000 Crore Loss Due To Subsidy Cut
The Government of India launched FAME II as a substantial effort to encourage the uptake of electric vehicles (EVs) in the country. This initiative involves offering financial assistance to both EV manufacturers and buyers with the goal of promoting electric mobility.
Earlier, it was revealed that some manufacturers exploited the scheme by disregarding its regulations. According to the FAME II scheme, electric vehicle (EV) producers are required to utilize EV components that are locally manufactured.
According to the Society of Manufacturers of Electric Vehicles (SMEV), seven electric two-wheeler companies have collectively experienced a total loss of more than ₹9,000 crore due to unpaid debts and decreased market presence after their subsidies were halted last year.
The government has instructed these companies to repay the subsidies they received. The audit conducted by SMEV's financial experts suggests that the combined losses incurred by these affected companies could potentially exceed ₹9,000 crore, as estimated on a cautious basis.
This initial assessment calculates the overall losses due to outstanding payments, interest, debts, market share reduction, damage to reputation, capital expenses, and possible financial reinforcement to be approximately ₹9,075 crore since the Ministry of Heavy Industries halted their subsidies from 2022, as stated by SMEV.
The government is requesting reimbursement of subsidies from companies like Hero Electric, Okinawa Autotech, Ampere EV, Revolt Motors, Benling India, Amo Mobility, and Lohia Auto. The truth is that some of these companies might never be able to regain their losses, while others could possibly shut down.
Underlining the urgency for a quick solution, Sanjay Kaul, the Chief Evangelist of SMEV, emphasized that it's paradoxical that as the industry discusses potential investments of USD 1 billion in the Indian EV sector, the existing losses are nearly equivalent to that amount of money.
In a letter addressed to the Union Minister Mahendra Nath Pandey, Sanjay Kaul ( Chief Evangelist of SMEV ) conveyed that the manufacturers are nearing a critical juncture due to escalating daily losses.
The letter suggests that if the ministry's aim was to penalize these original equipment manufacturers (OEMs), this prolonged delay is essentially leading to their downfall, as this penalty has persisted for more than 22 months.
"It appears that the OEMs have a serious predicament because apart from the monies held up for 18-22 months as unpaid subsidies, and the subsequent claim of MHI to claw back older subsidies, their new models have not been allowed to be uploaded on the NAB portal - in effect blocking them from doing any business at competitive prices," Kaul said.
SMEV suggests the establishment of a Rescue Fund by the ministry to assist struggling OEMs in recovering and revitalizing themselves through soft loans, grants, or similar strategies. These measures can help reinvigorate these manufacturers, as it aligns with MHI's responsibility to foster the electric vehicle ecosystem through financial initiatives.
The government is demanding reimbursement of subsidies from Hero Electric, Okinawa Autotech, Ampere EV, Revolt Motors, Benling India, Amo Mobility, and Lohia Auto. A probe by the Ministry of Heavy Industries has uncovered that these firms obtained financial benefits under the program by not adhering to the regulations.
Thoughts On The EV Maker's Loss
Opinions on the losses faced by EV makers due to the government's move to seek subsidy refunds may vary. Some may see it as a necessary step to ensure accountability and proper utilization-of-funds, while others might view it as potentially detrimental to the growth and stability of the EV-industry.
It underscores the importance of adhering to regulations and maintaining transparency in subsidy programs. The situation also highlights the need for effective communication and collaboration between the government and the EV sector to ensure sustainable development in the electric mobility ecosystem.
Continue with Google