Electric two-wheeler sales to take a hit in 2023 due to THIS reason? Explained

The EV 2-wheeler industry performance in the calendar year 2022 looks positive, with sales of around 6 lakh units however, December has recorded a sales dip raising concerns for 2023.

The government's withholding of a subsidy worth around Rs 1,100 crore might cause electric two-wheeler sales to fall 20 percent short of the objective of 10 lakh units in the fiscal 2022–23 period. According to the Society of Manufacturers of Electric Vehicles (SMEV), sales of electric two-wheelers reached almost 6 lakh units in 2022, with three major manufacturers—Hero Electric, Ola, and Okinawa—crossing the 1 lakh annual sales threshold for the first time.  These original equipment manufacturers (OEMs) dominated the E2W market, controlling over 50 percent of the total market share, and emerged as the top players in the category.

Though the E2W industry performance in the calendar year 2022 looks positive, with sales of around 6 lakh units, "the volumes are not keeping up with the projections made by Niti Aayog and many other research agencies," SMEV said.

"December has raised a red flag for the industry as it has witnessed a 28 percent dip in sales, reaching a total of only 59,554 units compared to 76,162 units on November 22, as per the VAHAN portal," it added.

SMEV Director General Sohinder Gill said sales for the nine months of the current FY23 ending December stood at around 5 lakh units and "there could be more than 20 percent shortfall in the projections made by NITI Aayog of 1 million units for the full FY23".

"Multiple factors have contributed to the sales curve falling in the last two months of the year, the foremost being the blockage of Rs 1,100 crore plus subsidy of the majority of the players for many months that has squeezed the working capital of major OEMs," he said.

Gill said, "More worrying is that this is slowing, unless  resolved quickly, may adversely affect the FY24 volumes projected to be 2 million plus units."

Last month, Union Heavy Industries Minister Mahendra Nath Pandey stated that the ministry had received complaints regarding some electric vehicle manufacturers' appropriation of subsidies under the FAME India Phase II scheme.

The government received complaints mainly related to the violation of Phased Manufacturing Programme (PMP) guidelines, which had been referred to the testing agencies for re-verification.

Following this, in respect of two OEMs, their models have been suspended from the FAME scheme, and processing of their pending claims has been stopped till they submit sufficient evidence to show their compliance to PMP timelines, he had said.

The other OEMs against whom complaints have been received include Bending India Energy and Technology; Okaya EV; Jitendra New EV Tech; Greaves Electric Mobility (formerly Ampere Vehicles Private Limited); Revolt Intellicorp; Kinetic Green Energy & Power Solutions; Avon Cycles; Lohia Auto Industries; Thukral Electric Bikes; and Victory Electric Vehicles International.

With PTI inputs