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Electric vehicles makers hit subsidy hurdle in India

According to reports, the Government’s delay in announcing subsidy schemes for electric vehicles has led many companies to either close shop or cut back operations.

Despite the Government’s announcement of the National Electric Mobility Mission Plan 2020 that envisages around seven million electric and hybrid vehicles in seven years, the subsidy schemes that would help achieve the target are yet to see the light of the day.

The Prime Minister had seen all the documents and proposals related to the Policy and subsidy schemes in January.

He had responded positively to them, according to industry sources.

The schemes includes non-levy of value added tax, no road tax and 15 per cent concession on the on-road price of the vehicle. Currently, only Delhi has implemented this.

In the two-wheelers segment, market leader Hero Electric has closed 35 dealerships across the country. The company’s network now stands at 204 showrooms. Lectrix Motors (part of SAR Group which also sells electrical products under the Luminous brand) has shut 10 of its 80 dealerships.

“Since March last year, around 400 dealerships have been closed down across India by many companies because operations could not be sustained. Companies such as Avon, BSA Motors, Ampere Vehicles and EKO Vehicles have already stopped production,” Sohinder Gill, Director Corporate Affairs, Society of Manufacturers of Electric Vehicles, told Business Line.

Gill, who is also the Chief Executive Officer (Global Business) of Hero Electric, said that the request sent to the Government to provide some subsidies have not been approved yet. If it is delayed further, the NEMMP 2020 target may be stretched to 2022 or 2023, he said. Hero Electric, which sold around 14,000 electric two-wheelers last year, is expecting to sell around 12,000 this year.

Lectrix Motors, which sells its products in Uttar Pradesh, Haryana, Punjab and some of parts of Rajasthan, is also expecting sales to drop. It sold around 2,000 units last year.

“There is no point of going aggressive right now on marketing of the products as variable cost is high. We expect this market to look up once Government announces the schemes. It is a wait-and-watch situation for us right now,” said Rakesh Malhotra, Founder and Director, Lectrix Motors.

The only electric car manufacturer, Mahindra Reva Electric Vehicles, which launched the e2o recently, is also not able to sell much as some of the customers are postponing the purchase on the hope that the subsidy schemes will be implemented soon, especially in Mumbai and Bangalore.

“Interest in buying the vehicle is picking up, but some are also postponing the purchase,” said Chetan Maini Chief of Strategy and Technology, Mahindra Reva Electric Vehicles.

The company has two models of e2o — T0 and T2 — priced between Rs 7.01 lakh and Rs 7.66 lakh in Mumbai, and Rs 6.44 lakh to Rs 6.75 lakh in Delhi.

When contacted, a senior official from the Ministry of Heavy Industries and Public Enterprises said that the matter is under discussion and the Government could reach a consensus on the issue soon. However, he declined to give any timeline.

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