Policy Predictability and Long-Term Subsidies Key for Electric Mobility, says Ather Energy

Ather Energy’s Chief Business Officer, Ravneet S Phokela, emphasized the importance of policy predictability and long-term subsidies for the acceleration of electric mobility in the two-wheeler segment. Ather Energy aims to achieve 100% electrification of the domestic two-wheeler market by 2030 and expand into similar markets in the near future.

With the FAME-II (Faster Adoption of Manufacturing of Electric Vehicles in India) scheme set to conclude in March 2022, Phokela expressed satisfaction with the government’s support and current subsidy levels. However, he called for an extension of the program for an additional three to five years to further stimulate electric vehicle (EV) adoption.

Phokela highlighted two key requirements for the next phase, often referred to as FAME III. First, he emphasized the need for an extended time period. Second, he stressed the importance of policy predictability. Unpredictability can have a detrimental impact on businesses’ investment plans, as they are often based on subsidy assumptions. Any sudden changes in these assumptions can disrupt these plans.

Ather Energy had plans to establish a third manufacturing facility with an annual capacity of one million units, but the location has not been finalized. Phokela urged for policy consistency, stating that businesses need predictable policies to make sound investment decisions.

In terms of subsidies, Phokela mentioned that the company is content with the current subsidy levels and does not recommend reverting to higher levels, as it can distort market dynamics. He emphasized the importance of not relying on artificial pricing in the EV market.

Furthermore, Phokela recommended that the duration of subsidies for electric two-wheelers should be three to five years, but he argued that longevity is more important than a higher subsidy amount in one year. He suggested spreading out the finite amount of money over several years to ensure sustained support for the industry.

Ather Energy is open to the idea of gradually reducing the subsidy structure each year. The subsidy for electric two-wheelers was reduced on June 1, 2021, under the FAME-II scheme, with incentives capped at 15% of the ex-factory price of vehicles and a fixed demand incentive.

Regarding the possibility of achieving 100% electrification of the two-wheeler market in India, Phokela stated that it will certainly happen by 2030. However, by 2025, he expects the penetration to reach around 50-55%.

While Ather Energy has primarily focused on domestic opportunities, Phokela mentioned that there has been interest from overseas markets. The company is preparing to start exporting its products, with an announcement expected in the next two months. They are targeting markets that share similarities with India, making international expansion easier.

– PTI Inputs