Policy changes, hybrid competition to hit EV sales in June

Electric vehicle (EV) sales in India fell 14 percent in June compared to May. Experts suggest that this could be due to several factors, such as changes in government policy and people’s growing interest in hybrid vehicles.

However, it should be noted that sales in June 2024 were more than 20 per cent higher compared to the same month last year, when sales fell due to government subsidy changes.

This indicates the potential for growth in the electric vehicle market. Electric vehicle (EV) sales in June 2024 fell by more than 14 percent to 106,081 units, compared to 123,704 units sold in May. This was the lowest sales figure this calendar year. Year-to-date, some 839,545 EVs have been sold, accounting for about 6.69 percent of the total 12,541,684 cars sold.

June has historically been a difficult month for EVs, both this year and last year. However, June 2024 saw a significant improvement, with 123,704 units registered, up 20.52 percent from the 102,645 units registered in June 2023.

This resilience of the electric vehicle market is a reassuring signal to stakeholders.

Last year, sales of electric vehicles fell due to the Centre’s decision to reduce the maximum subsidy on electric two-wheelers (e2Ws) from around Rs 60,000 to around Rs 22,500. The move led to a more than 20 per cent increase in the average price of an e2W, which usually ranges from Rs 80,000 to Rs 150,000.

Following the government’s decision to cut subsidies, most original equipment manufacturers (OEMs) increased the prices of their vehicles in the first week of June. This created a significant price gap between eco-friendly and petrol-powered vehicles, affecting the purchasing decisions of potential buyers.

Electric two-wheelers (e2W) account for 57% of the 839,545 total electric vehicles sold in 2024. Changes in e2W sales have a significant impact on overall sales in the electric vehicle category.

This year, the government further cut the subsidy by half in April with the introduction of the Rs 500-crore Electric Mobility Promotion Scheme 2024 (EMPS 2024). Under EMPS 2024, the subsidy limit for electric two-wheelers (e2W) is now Rs 10,000 per vehicle, down from Rs 22,500, while that for electric three-wheelers (e3W) has been reduced from Rs 1,11,505 to Rs 50,000. Both categories will get incentives of Rs 5,000 per kilowatt-hour (kWh).

Industry executives fear that expected sales growth could be delayed if the government does not extend the current Electric Mobility Promotion Program 2024 (EMPS 2024) or introduce the third phase of FAME.