Best Time To Buy Electric Scooters: Major Price Hike From April 1

Updated: Monday, March 18, 2024, 10:27 [IST]

According to the Investment Information and Credit Rating Agency of India Limited (ICRA), a notable shift in the electric two-wheeler market is on the horizon, following the introduction of the Electric Mobility Promotion Scheme 2024 by the Indian government.

Set to replace the outgoing FAME 2 scheme on April 1, this new initiative aims to bolster electric vehicle (EV) adoption. However, it brings a notable increase in the upfront cost of electric bikes and scooters, estimated at about 10 percent higher than under the previous subsidies.

Impact of the Electric Mobility Promotion Scheme

The scheme, which runs from April 1 to July 31, is backed by a Rs 500 crore outlay from the Ministry of Heavy Industries. It targets the support of electric two and three-wheelers but reduces the subsidy to Rs 5,000/kWh, down from Rs 10,000/kWh, capping the benefit at Rs 10,000 per vehicle.

ICRA's analysis indicates that this reduction in subsidy will lead to an increase in the initial purchase costs of electric two-wheelers, making them over 70 percent more expensive than their ICE (Internal Combustion Engine) counterparts.

This adjustment in subsidy is also expected to extend the payback period for electric two-wheelers to 5.5 years, compared to the previous five years under the FAME 2 framework. This projection is based on the assumption that manufacturers will pass the reduced subsidy on to consumers in the form of price hikes.

Future Outlook for Electric Two-Wheelers

Despite these challenges, the future for electric two-wheelers in India remains bright. Factors such as lower ownership costs compared to ICE vehicles, improved safety features, and longer ranges contribute to this optimism.

Furthermore, the government's dedication to pushing for EV adoption through various initiatives, including the Production Linked Incentive (PLI) scheme, is expected to further catalyze this shift. ICRA anticipates that the market penetration of electric two-wheelers will climb to 6-8 percent by 2025, a significant increase from the current 5 percent.

Thoughts About Price Hike On Electric Scooters

While the Electric Mobility Promotion Scheme 2024 introduces new hurdles in the form of higher initial costs, the long-term benefits and governmental support for electric vehicles paint a hopeful picture for the future of electric mobility in India.