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Higher fuel prices, subsidies push EV sales to record high in July

By Ruchi Upadhyay 
Updated Date
Higher fuel prices, subsidies push EV sales to record high in July

New Delhi: High prices of petrol and diesel and a flurry of incentives being offered by state governments across the country have pushed electrical vehicle retail sales in India to record levels in July 2021.

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The industry logged sales of 26,138 units during the month as per data collated by the government’s Vahan portal. This was higher than the 26,079 units that were retailed in March this year before the second wave of the pandemic hit the country. These are the only two instances where sales have crossed the 20,000 unit mark in a month.

Most of the sales are in the two and three wheeler segments even though growth is strong in passenger vehicles too. With petrol prices crossing INR 100 per litre in most parts of the country, the economic attractiveness of electric two-wheelers has only gone up.

Further, many state governments have come up with their own electric vehicle policy in the last few months offering direct subsidies on vehicles to bring down the cost. This has also helped. Last month, Maharashtra unveiled its policy which offered a base incentive of INR 5,000 per KWH with a cap of INR 10,000 for two-wheelers, INR 30,000 for three- wheelers and INR 1.5 lakh for passenger vehicles. It has set a target of 10% of new vehicle sales as EVs by 2025.

Gujarat has set an even higher benchmark by offering INR 10,000 per KWH incentive for EVs with a higher cap of INR 20,000 for two- wheelers, INR 50,000 for three-wheelers and INR 1.5 lakh for passenger vehicles.

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The central government had also recently extended the validity of the FAME II scheme by two years till March 31, 2024 while increasing the level of incentives on two-wheelers from INR 10,000 per KWH to INR 15,000 KWH. The maximum cap was also increased from 20% to 40% of the total cost of a two-wheeler.

“It is like a dream script. Fuel prices are at an all-time high and consumers are thinking of more economical options. Nothing beats an EV in total cost of ownership,” Tarun Mehta, co-founder and chief executive, Ather Energy, said at the launch of a new showroom in the national capital recently. “At the same time, there is a healthy competition among states on who can offer better incentives for electric mobility. That is how it should be because saving the environment is non-negotiable,” he said.

The entry of Ola Electric, which will launch its first electric scooter on August 15, is likely to provide a further boost to the industry. The company has already received over 1 lakh pre-launch bookings for its scooter and is setting up the largest E-scooter factory in the world with a capacity of 20 lakh units in the initial phase.

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