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New norms requiring re-certification of all existing electric vehicles have brought sales of all Electric Vehicles to a halt. Affected by this move are the two and three-wheeler electric industries. The need for re-certification has been called for by the government and is now a requirement under the FAME II scheme.
According to the Economic Times, sales figures have dropped from 6,000 units in March to almost zero this month. An electric vehicle manufacturer said that vehicle have become costlier under the second phase of the FAME programme because of lower subsidy. Only electric two-wheelers that feature a Lithium-ion battery are eligible for a subsidy under the FAME II scheme.
Sohinder Gill, Director General, Society of Manufacturers of Electric Vehicles (SMEV), said, "April was a washout, Only three models were certified by government agencies towards the end of the month. But there were no sales under FAME-II. In May too, the industry will end up selling a few hundred units... It is only in August that sales may gain some pace."
Original Equipment Manufacturers (OEM) are required to get their models certified from recognised testing agencies under Rule 126 of the Central Motor Vehicle Rules (CMVR), 1989, to be eligible under FAME India Scheme Phase-II. Once certified, electric two-wheelers get a subsidy of Rs 10,000 per kilowatt hour (kWh).
Certification processes typically take up to three months and manufacturers say the government has not given them enough time to be prepared. The FAME II scheme came into effect last month and most manufacturer have not been able to meet the 50 per cent localisation requirement.
MH Reddy, Chairman, NDS Eco Motors, said, "We have not been given any time to meet the localisation norms and re-certify vehicles. There is no local base to procure from currently. Sales have come to a standstill. If the industry had been given a year time to increase content localisation, demand would have remained unaffected.''
"If we look at internal combustion engine vehicles, volumes are high, supplier chains are well established, prices therefore are reasonable. Even then they end up importing 15-20% of vehicle parts. Unless the domestic electric two-wheeler industry reaches annual volumes of 1 million units, vendors will not have economies of scale to sell at competitive prices.", he added.
In order to avail incentives under the FAME II scheme, electric vehicle manufacturers have to meet a localisation content requirement of 50 percent of the ex-factory price of their vehicles. Motors, controllers, and batteries account for more than 50 percent of the ex-factory prices, and these parts are being imported.
The industry feels that the government needs to give them visibility on the long term. They say of they know and understand the kind of volumes expected over a 5 or 10 year period, they can make better decisions and investments. They also feel this will help with localizing content.
Mr. Gill, also the Chief Executive Officer at Hero Electric, said, "Under FAME-I, the government extended uniform demand incentive of Rs 22,000 for electric two-wheelers."
The Electric Vehicle industry feels that the goal of one-million electric two-wheelers within the next three years is a difficult target to reach. Without the current challenges, only 1.26 lakh E Vs were sold during the last financial year.
Thoughts About Electric Vehicles Coming To A Halt
Not good. Not good at all. The government's decision to support the Electric Revolution was great, but we do not think they're doing a good job of supporting it. They seem to be reducing the incentives for everyone. The government needs to re-work the plan they have and if they're really serious about going green, they will have to extend support and incentives across the board. Fingers crossed!