New Delhi, Mar 11 (KNN) With the impending end of the Faster Adoption and Manufacturing of Hybrid and Electric Vehicle (FAME-II) subsidy on March 31, electric vehicle (EV) companies are bracing themselves for significant changes in the market landscape.

Despite hopes for an extension, automakers are preparing for potential disruptions in sales and pricing strategies.

The discontinuation of FAME-II subsidies poses multifaceted challenges for EV players.

The prospect of a sudden price hike of up to 25 per cent raises concerns about consumer adoption.

Such a substantial increase in prices could deter potential buyers, potentially derailing the positive momentum towards electric vehicles.

Additionally, the withdrawal of subsidies threatens to disrupt investments across the EV ecosystem, including manufacturers, component suppliers, and charging infrastructure developers.

This poses a threat to the overarching goal of fostering self-sustainability and hindering the progress of the 'Make in India' initiative.

Sulajja Firodia Motwani, Founder and CEO of Kinetic Green, emphasised the importance of demand incentives until a substantial demand penetration of 15-20 per cent is achieved, highlighting the crucial role of government support in sustaining growth within the sector.

Despite recent enhancements to the financial outlay of the FAME scheme, with the Union government allocating Rs 11,500 crore, the uncertainty surrounding its extension is unsettling for electric vehicle players.

The scheme, which was initiated in 2019 with an initial outlay of Rs 10,500 crore, was extended until March 2024.

However, the looming conclusion of the subsidy program could lead to intensified competition and price wars, further impacting EV penetration in the country.

In response to the subsidy's potential discontinuation, electric vehicle manufacturers are exploring various strategies to navigate the evolving landscape.

Some may focus on cost reduction initiatives by incorporating more economical materials, while others might pivot towards the premium segment, where consumers are less price-sensitive, and profit margins are higher.

Pritesh Mahajan, founder of Revamp Moto, highlighted the challenges ahead for electric vehicle manufacturers, emphasising the adverse effects of subsidy withdrawal on overall sales and profitability.

(KNN Bureau)