PM-E Drive Scheme Alters EV Landscape as Funding Drops by 37%

ENA Sectors 2024-12-26 18:20:18 New Delhi, Dec 26 (KNN) India's electric vehicle (EV) sector has experienced a sharp decline in funding, dropping from USD 934 million in 2022 to USD 586 million in 2024, as reported by The Economic Times citing Venture Intelligence data. This decline reflects a more cautious investment approach, attributed to changes in government policies and slower growth in EV sales. Despite the number of deals remaining steady at 44, the volume of funding highlights investor reluctance, with a focus now on unit economics and profitability before committing capital. A significant policy shift in 2024 has been the transition from the FAME-II program to the PM-E drive scheme. Launched in October 2024, the PM-E drive aims to phase out subsidies gradually, offering reduced incentives for electric two-wheelers. Under this new scheme, the subsidy is capped at Rs 5,000 per kilowatt-hour (kWh) for the first year, with a maximum of Rs 10,000 per vehicle. In contrast, the previous FAME-II program offered Rs 15,000 per kWh, covering up to 40 per cent of the vehicle cost. Notably, the PM-E drive excludes subsidies for electric four-wheelers and hybrid vehicles, a move that has impacted original equipment manufacturers (OEMs). Despite the funding downturn, the sector has seen a few notable investments. Ather Energy, for instance, secured USD 71 million from the National Investment and Infrastructure Fund (NIIF), propelling it to unicorn status and setting the stage for a potential IPO. However, such large deals are now exceptions in the more cautious funding landscape. Sales growth has also slowed. While over 1.9 million EVs were sold in 2024, representing a 24.5 per cent increase from the previous year, this growth is significantly lower than the 50 per cent increase seen in 2023. The two-wheeler segment, led by companies like Ola Electric, continues to dominate, accounting for 1.13 million units of the total sales. Despite these challenges, the Indian government's ambitious target of achieving 30 per cent EV penetration in new vehicle registrations by 2030 continues to fuel optimism. Investors are increasingly focusing on emerging areas such as component manufacturing, battery swapping, charging infrastructure, and financing. Battery swapping, in particular, is seeing rapid growth, with companies like Battery Smart conducting over 100,000 swaps daily and raising significant capital. The PM-E drive scheme, with its focus on expanding charging infrastructure and domestic EV manufacturing, aims to further accelerate EV adoption, contributing to the sector's long-term growth. (KNN Bureau) 40398 https://knnindia.co.in/news/newsdetails/sectors/pm-e-drive-scheme-alters-ev-landscape-as-funding-drops-by-37 2024-12-26 18:20:18 knnindia.co.in PM-E Drive Scheme Alters EV Landscape as Funding Drops by 37%