Electric Vehicles segment faces a slump as subsidy revoked

Sales of Electric Vehicles (EVs) have dipped by 75 per cent since April 2012 as the cash subsidy scheme on electric vehicles was revoked prior to the implementation of the national action plan. Industry experts are now demanding an extension of the subsidy scheme until the policy is announced.

Electric Vehicles segment faces a slump as subsidy revoked

 

Joint Managing Director, Electrotherm, Ahmedabad, the manufacturer of YObykes, Avinash Bhandari, said, "Sales of our bikes are down by 75 per cent in the current fiscal. We have footfalls but they are not getting converted into sales, as consumers find that the subsidy is no longer available.”

Electric Vehicles segment faces a slump as subsidy revoked

 

According to Director, Society of Manufacturers of Electriv Vehilces (SMEV), Sohinder Gill, not a single electric car was sold in April and May 2012 due to the withdrawal of the subsidy. He said that the dealers do not find the segment lucrative any more due to more than 50 per cent decline in the sales volume. Gill stated, "Close to 33 per cent of the dealers are reverting to their earlier business and around 20 per cent have put down shutters. It is difficult to convince them for persisting in the business. Rental and other operating expenses are high."

The subsidy scheme which expired on March 31, 2012 was provided by the Union Ministry of New and Renewable Energy (MNRE). It involved a cash subsidy of Rs. 4,000-5,000 on electric two wheelers and of Rs. 1 lac on electric cars. The local electric vehicle manufacturers registered with MNRE can avail the subsidy and pass it on to the customers. There are 12 manufacturers of electric two wheelers, including Electrotherm, Hero Electric and BSA Electric, though there are regional companies too. Mahindra Reva is the only manufacturer registered with MNRE which produces electric cars.

According to Chief Operating Officer (COO), Mahindra Reva, R. Chandramouli, the cash subsidy is very less in India compared to other countries. He is optimistic that the National Electric Mobility Action Plan, which is bound to replace MNRE's scheme, can resolve this issue. He said, "The US government gives a subsidy of $7,500 per vehicle. In China, the national government gives a subsidy of $8,000 and in European countries it is 3,000 Euros."

However, the industry is concerned as the trained workforce accumulated over the years is shifting to other sectors. It blames this migration on the time gap between the expiry of the subsidy scheme and launch of the national action plan. Gill, who is also Chief Executive Officer (CEO) of Hero Electric, said, "We have manpower of 2,000 people. But they are moving to other jobs. It will be difficult to bring them again if corrective measures are not taken."