Subsidies in the Electric vehicle market pulled the attention of a remarkable number of customers in the recent past. The union Ministry of New and Renewable Energy (MNRE) had provided a cash subsidy of Rs. 4,000 -5,000 on electric two wheelers and Rs. one lakh on the electric cars. Electrotherm, the Ahmedabad-based manufacturer of Yo bykes, was one among those who reaped the benefit of this policy. The company sales doubled to 80,000 units in 2011-12, thanks to the subsidy. Unfortunately, the subsidy scheme ended on March 31, 2012. This led to drop in sales of electric bikes by 75 percent since April 2012. Other players even claimed that not a single unit was sold in the month of April and May.

The scheme was put to an end as a new policy was supposed to come into the picture. The new scheme called National Electric Mobility Plan of the Ministry of Heavy Industries (MoHI) of the Union Government is aimed at creating an ecosystem for promotion of electric and hybrid vehicles in the country. This plan provides features like cash subsidy and financing facilities for the customers. It also would cater to creating a network of charging stations. But, the time gap between the end of the earlier scheme and start of the new scheme turned the markets down. Thus, the companies like Electrotherm, Hero Electric and BSA Electric are demanding extension of the previous policy till the new one comes into action.

The drop in sales has adversely affected the manufacturers. Almost 33 percent of the dealers are reverting to their earlier businesses and around 20 percent have just shut the business. Quite evident that unless correction measures are taken it is difficult for them to persist in the business owing to the high rental and other operating expenses. Not just that, but even the workforce is looking for better options. In India, the subsidy is very less compared to what is offered in other countries. The US government gives a subsidy of $7,500 per unit and China gives a subsidy of $8,000 per unit. If timely action is not taken, what would be future of this market? Only hope is to see better offers in the National Electric Mobility Action Plan.

Source – The Economic Times