The electric vehicle (EV) market in India is experiencing steady growth, with over 1.6 million units sold in fiscal 2024, up 41% from the previous year. Despite this, momentum appears to have slowed slightly, with sales falling 10% in August.
As India looks to further accelerate its adoption of electric vehicles through the upcoming government-backed incentive scheme like FAME (Faster Adoption and Manufacturing of Electric Vehicles) 3, Suman Mishra, CEO, Mahindra Last Mile Mobility, expressed optimism that the enhancements from the Electric Mobility Promotion Scheme (EMPS) will carry over to the upcoming FAME 3 scheme, ensuring continuity for customers who rely on the affordability and technological advancements offered by electric two- and three-wheelers.
EMPS is a more refined version of FAME 2, especially in the three-wheeler category. According to Mishra, this scheme has addressed the earlier hurdles related to documentation and process, providing a smoother path for electric vehicles in the last-mile segment.
Mahesh Babu, CEO of Switch Mobility, echoed similar sentiments regarding the electric bus segment, which has been a priority for both the government and OEMs. He noted that despite a slow start, the electric bus sector has seen significant growth, with over 3,700 electric buses registered last year and an expectation that the figure will double in the next fiscal year. Babu noted that Switch Mobility alone has over 1,500 confirmed orders and the market is currently flooded with tenders for over 6,000 electric buses, reflecting a strong focus on expanding electric public transport infrastructure.
While the transition between FAME 2 and its successor schemes caused minimal disruption in the electric bus sector, Babu acknowledged some challenges in the light commercial vehicle (LCV) segment due to changes in subsidy coverage. He stressed that the long-term goal should be to reduce dependence on subsidies while simplifying procedures to directly benefit consumers.
Below are excerpts from the interview.
Q: Were there any obstacles that companies like yours had to face with the FAME 2 plan that you hope will be resolved now?
Mishra: In the three-wheeler category, the Electric Mobility Promotion Scheme (EMPS) is a more simplified version of the FAME 2 scheme. Any challenges that existed in FAME 2 in terms of documentation or process-related issues have now been smoothed out in the EMPS.
We hope that the lessons we have learned over the past few months will be translated into the FAME 3 plan. We look forward to a smooth transition for EMPS to FAME 3.
The only kind of hiccup we experienced was when there was a cutoff between FAME 2 and EMPS… we have been assured that when FAME 3 comes out, those issues will be fixed.
In the current situation, if EMPS is extended till FAME 3 comes, it would be a huge relief for this category, especially in the last mile segment like two-wheelers and three-wheelers, as these customers do not have the wealth or socio-economic status to afford price parity upfront. Thus, EMPS is actually helping such customers avail the best in technology and see a significant improvement in the cost of living. We just hope that the scheme continues and stays in FAME 3.
Q: I would like to ask you about the growth you have seen in the electric bus segment. This has been a priority area but is slow to take off. What is the year-on-year growth you expect for FY25 compared to FY24?
Babu:I think in the bus segment, the government and state-owned transport companies are paying a lot of attention, and there are a lot of models launched by the OEMs. Last year, about 3,700 electric buses were registered, and we expect that number to double. And at Switch Mobility, we have more than 1,500 confirmed orders, which we will be supplying in the next 12 to 18 months. There are a lot of tenders going on, we see more than 6,000 electric bus tenders right now in the market, which clearly indicates that the focus is on electric buses.
Q: Do you think there was also any disruption in the electric bus segment as a result of the completion of FAME 2? Now all eyes are on FAME 3. Do you have any hopes and expectations regarding FAME 3? And what disruptions have you faced in the meantime?
Babu: The bus segment has not been affected much, but light commercial vehicles, which we started delivering in April, were affected because FAME 2 included four-wheeled commercial vehicles and the short-term plan (EMPS) does not cover them. Having said that, one day the subsidies will go away, but it is not going to be a continuous thing. Even without subsidies, our four-wheelers were very well received in the market. There are more than 300 vehicles in circulation. Customers can see the benefit of economy due to electric vehicles in the four-wheeler segment.
The only thing is that these products are going to the last mile and middle mile consumers or the drivers who are at the bottom of the pyramid. I want to impress upon the government that the incentive is given to the customers, not to the OEMs, so the procedures and policies should be geared towards benefiting the customers, not the OEMs. The OEMs are just a medium through which the benefit is passed on to the customers, so a simplified procedure would be welcome for the customers.
Watch the attached video for the full conversation.
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