About 85 per cent of the outlay would be as a demand incentive applicable to buses, passenger vehicles and three-wheelers registered for commercial usage and public transport, along with privately owned two-wheelers.
Electric two-wheeler segment is expected to face a rough road in the initial phase of the FAME II Scheme with the exclusion of lead battery-powered such vehicles, as per a CRISIL impact note.
The Central Government late last month laid out the eligibility criteria for electric buses, passenger vehicles, three-wheelers and two-wheelers to avail the incentives under the ‘Faster Adoption and Manufacturing of Hybrid and Electric Vehicles in India’ (FAME-II) scheme. The criteria are based on minimum top speed, range per charge and acceleration as well as energy consumption efficiency of EVs.
Expectations from FAME II
“Our assessment of the product portfolio of various EV manufacturers indicates that the electric two-wheeler segment would be impacted the most by FAME-II rules. We believe more than 95 per cent of the electric two-wheeler models being produced now will not be eligible for an incentive under FAME-II,” CRISIL said in the note issued on Sunday.
The second phase of the scheme, which is effective from April 1, will be for a period of three years with an outlay of Rs 10,000 crore and will be applicable to vehicles with ‘advanced batteries’ (excluding lead-acid ones).
According to the note, about 90 per cent of the vehicles that availed incentives under the FAME I scheme, which was operational between April 1, 2015, and March 31 this year, were electric scooters.
As per the CRISIL note, about 85 per cent of the outlay would be as a demand incentive applicable to buses, passenger vehicles and three-wheelers registered for commercial usage and public transport, along with privately owned two-wheelers.
“EV makers have been caught off-guard by the stringent eligibility criteria leaving them no time to confirm. They are expected to increase the battery size of their offerings for higher range and speed, improve battery technology for more charging cycles, among others, in their 2-wheelers in order to be eligible for the incentives,” it said.
Moreover, the requirement of 50 per cent localisation in manufacturing is also expected to be a hurdle for many original equipment makers. And going ahead, upgradation of products and localisation would increase the costs for e-scooters, which could hurt demand, according to CRISIL.
