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Electric two-wheeler (E2W) sales in India rose over two-and-half-fold to 8,46,976 units in 2022-23 over the previous fiscal, the Society of Manufacturers of Electric Vehicles (SMEV) said on Monday.

Total sales of E2W were at 3,27,900 units in 2021-22.

Citing data sourced from manufacturers, SMEV said FY23 saw sales of 1.2 lakh low-speed e-scooters with a top speed of less than 25 km/hr.

“In the electric two-wheeler segment, the industry sold 7,26,976 high-speed E2W (top speed more than 25km/hr) in FY23,” it added.

In 2021-22, sales of low-speed e-scooters were at 75,457 units, while those of high-speed e-scooters were at 2,52,443 units.

SMEV said in FY23, E2W adoption ended “with an annual shortfall of more than 25% over the minimum target set by NITI Aayog and various research organisations”.

The industry body said the withholding of subsidies under FAME II for not complying with Phased Manufacturing Programme (PMP) guidelines under the scheme has had an impact on the sales of E2Ws.

“Ironically, it was not the consumer demand but the sudden withholding of more than the Rs 1,200 crore subsidy already passed on by the majority of original equipment manufacturers (OEMs) to customers on the pretext of delay in localisation,” it said.

Another Rs 400 crore of the OEMs operating in the premium end also got stuck due to the allegation of under-invoicing to bypass the FAME norms leading to the crippling of their business operations due to extreme shortage of working capital, SMEV added.

“Today, 16 companies that represent more than 95% of the industry are waiting for some resolution for the chaos, and the fiasco of the FAME PMP are cleared to enable them to plan their businesses in the year FY24,” it said.

SMEV Director General Sohinder Gill said, “With only 5% adoption in FY23, the short-term goal of 30% and the EV mission of 80% adoption by 2030 looks more like a mirage.”

However, he said, “All is not lost, and what perhaps can put the industry back on track is an extension of the PMP eligibility criteria by two years and strictly enforcing it from April 23.”

SMEV pointed out that the government’s decision on the continuation of the FAME scheme is a critical piece that will decide the fate of the entire industry, and the market is eagerly waiting for clarity.

To encourage the development of the EV ecosystem and make it self-sustaining, it is crucial to have an extension of the FAME scheme for at least three to four years, it said.

“The confusion among players is making it difficult for them to develop a long-term strategy. Any abrupt reduction in subsidies will have a significant influence on the growth trajectory and could jeopardise the government’s plan for e-mobility. It will have a negative effect and could completely eliminate a sizable portion of the market,” it added.

The EV industry body pointed out that the absence of enough local manufacturing capacity for vital components like batteries and motors is one of the major problems in the supply chain.

“Due to supply chain interruptions during COVID-19, the industry suffered greatly to find high-quality components,” it added.

SMEV also called for rectification of the existing subsidy mechanism under which manufacturers pass the subsidy to the customer and claim it from the government post the sale.

“The current method lacks transparency, which may lead to OEMs manipulating sales to claim the subsidy fraudulently,” it said, recommending the introduction of a direct subsidy mechanism that allows incentives to be directly paid to the customer by the government and avoid any discrepancy.