Ola Electric captured 53 per cent of the electric two-wheeler market in April, marking one of its highest shares since its launch. However, this might not be cause for celebration just yet, as its registrations declined sharply compared to March, which saw record sales for the sector.
While Ola’s registrations dropped by 38 per cent in April compared to March, totaling 30,728 vehicles, it gained market share because its decline was much lower than the industry average.
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Overall, electric two-wheeler registrations plummeted by 56 per cent from 131,690 vehicles in March to a mere 57,618 in April, triggered by the government’s replacement of the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME) II subsidy scheme with a new Electric Mobility Promotion Scheme (EMPS) for a limited four-month period, featuring considerably reduced subsidies effective from April 1.
Most electric two-wheeler companies expected a shallower decline in sales this time, expecting a quicker
recovery than what was experienced last June, when the government also implemented a sharper cut in the FAME II subsidy, reducing it by a third.
Companies were forced to increase vehicle prices by Rs 20,000–30,000.
However, they did not foresee that the drop in registrations would be as severe as last June after subsidy cuts, with registrations decreasing by 56 per cent compared to the previous month. This occurred despite the fact that price increases this time were much more moderate and consumers had a wider selection of models available at different price points.
There are two primary reasons for the big drop in sales: firstly, the EMPS, limited to four months, replaced FAME II, taking effect on April 1 with the subsidy per kilowatt hour (kWh) slashed by half to Rs 5,000, with a cap of Rs 10,000 (compared to Rs 22,500 previously), prompting most companies to raise their prices by Rs 5,000 to Rs 10,000.
Also, pent-up demand for electric two-wheelers was accelerated by consumers, as manufacturers offered attractive discounts to deplete their inventory before the higher FAME II subsidy expired on March 31.
A senior executive from one of the electric vehicle companies said, “If the subsidy scheme is not extended beyond four months, we foresee an adverse impact on overall growth. If continued, we expect a pickup in the festival season, reaching 1.5 million by the end of the financial year.”
Secondly, the issue has been exacerbated by the fact that two-wheeler companies are also grappling with teething problems, as the launch of the new scheme was rushed with insufficient time for implementation, and even the new website for claims is not yet operational, resulting in many companies slowing down production.
If Ola Electric’s decline in sales has been less pronounced, it is because the company is focusing on selling two-wheelers that are more affordable in the sub-Rs 1 lakh range, such as their Rs 84,999 offering, rather than solely focusing on the over -Rs 1 lakh market.
