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Investment in the electronic vehicle (EV) sector in India is set to almost halve between 2022 and 2024. This situation has arisen due to policy changes and decline in sales growth. The PM-E Drive scheme, implemented in October, aims to gradually reduce the industry’s dependence on subsidies by replacing the FAM-TO programme.
The PM-E drive scheme is a replacement for the FAM-2. Market experts are saying that this decision has now had an adverse impact on the industry. The PM-E Drive scheme does not include subsidies for electric four-wheelers and hybrid cars. That is, under this scheme implemented in October, subsidy was removed from electric four-wheelers and hybrid vehicles. Most of the funds have been raised in the original equipment manufacturing (OEM) sector, which has been hit by policy changes and a significant reduction in subsidies, a report said. Under the new scheme, the subsidy for electric two-wheelers is based on battery power, capped at Rs 10,000 with a fixed rate of Rs 5,000 per kilowatt hour in the first year. Despite the challenges, the PM-E Drive scheme has weathered this downturn, with leading investment rounds like Ather Energy driving growth. EV investors want EV companies to sell units earlier and increase profitability. Funding in the overall EV industry is expected to decline from $808 million last year to $586 million in 2024, according to data from Venture Intelligence. The number of guaranteed deals was 44. Which was at the same level a year ago. EV startups may earn $934 million in 2022 due to investors’ bullishness. The level of income under this heading was due to government incentives in this sector. In comparison, the Fame-Two scheme offered a maximum incentive of Rs 15,000 per kilowatt hour. Which covers up to 40 percent of the cost of the vehicle. FAME stands for Accelerated Manufacturing of Electric Vehicles. However, in the year 2023 it was revised to Rs 10,000 per kilowatt hour. In which the incentive limit was reduced to 15 percent of the ex-factory price of the vehicle.
Ather Energy has raised $71 million from the National Investment and Infrastructure Fund (NIIF) in its largest investment round of the year. Market experts said that if we look at the overall growth rate of EV registrations in India year-on-year, the percentage growth rate is decreasing due to base effect. But this sector is still growing. More than 19 lakh EVs were sold this year. Which is 24.5 percent more than 15 lakh in 2023. This is well below the 50 percent increase expected between 2022 and 2023, government data said. Of course, despite the challenges in the sector, EV investors and stakeholders are optimistic, as the government has set a target of achieving 30 percent sales growth in the sector by 2030. There is hope for future capital growth in this sector.