E-scooter companies gear up for gradual price hikes

Electric two-wheelers are set to get dearer by up to 18% as a majority of manufacturers availing of the FAME-2 benefits are likely to pass on some impact of the reduction in the government-funded subsidy from June 1 to customers.

Most are likely to do it in a staggered way. The price increase might have a short-term impact on demand but it would even itself out in the medium to long term, manufacturers said.

Ola Electric, which leads the e-two-wheeler market with a 28% share, is set to jack up the prices of its models by ₹15,000 each. While the price of S1 Pro will increase to ₹1,40,000 from ₹1,25,000, that of S1 will go up to ₹1,30,000 from ₹1,15,000, a company spokesperson said.


For Ather Energy, the impact owing to reduction in subsidy would be an average ₹32,500 per vehicle, but the company is unlikely to pass it on to the buyers in entirety, its chief business officer Ravneet Singh Phokela said. "We haven't taken a call on how much to pass on. If we do it in one shot, it would be a big shock for the customers," he told ET.

Phokela doesn't expect the price hike to impact demand in the medium to long term. It may lead to deferment of some business plans by a few quarters, he said. While the industry must prepare for selling e-scooters without subsidy, the process has to be a gradual one, he said. "While one had anticipated this, no one expected it to happen that soon."

Most of the other manufacturers, including TVS Motor that sells the iQube, Bajaj Auto that sells the Chetak, and Greaves Electric Mobility plan to announce price hikes on Thursday, according to their spokespersons.

According to Morgan Stanley estimates, TVS iQube prices could go up by 14% to ₹17,000 per unit.

But not everyone is on board with the price hikes. Hero Electric, which sells the Optima among other brands, has decided not to increase prices immediately. "Despite the recent reduction in the FAME-2 subsidy, the company remains dedicated to promoting the adoption of e-two-wheelers and dispelling misconceptions about their cost of ownership," the company said in a statement on Wednesday. FAME refers to faster adoption and manufacturing of hybrid and electric vehicles.

In a notification last week, the ministry of heavy industries said it would reduce the subsidy on e-two-wheelers to ₹10,000 per kwh from ₹15,000 per kwh and cap maximum subsidy at 15% of the ex-factory pricing against 40% offered earlier effective June 1.

Sales of e-two-wheelers dropped to 66,676 units in April against 86,197 units in March even as realisation per vehicle dropped as some manufacturers had to refund prices of chargers to customers to continue to avail government subsidy.

"The drop in sales is not a reflection of demand, the demand remains very strong," Phokela said. He attributed it to ambiguity around the subsidy and procedural and technical reasons.

The fall in sales resulted in e-two-wheeler penetration as the percentage of total two-wheeler sales volume to drop to 5.4% in April from 5.9% in March. To be sure, nearly ₹1,200 crore worth of subsidy has been withheld by the government and payment has been suspended for over a year, restricting the growth of the segment. As a result, driven by issues around subsidy, the e-two-wheeler market has witnessed consolidation in the past few months with Ola and TVS gaining the most.