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Is EV a failed experiment in the Indian automobile market?

Explore the dynamics impacting EV sales in India. From subsidy shifts to marketing strategies, understand why EVs are still the future despite recent challenges.
BhavikBhavik8-May-24 11:12 AM
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Is EV a failed experiment in the Indian automobile market?

The Indian

EV

scenario has been subjected to many rumours and questions after the disclosure of last month’s April sales data. The prominent Indian EV company in the two-wheeler segment, Ola Electric which initially crossed the 50,000 sales mark is now also observing a drop in the company’s sales volume taking the number of units sold to 33,934. 

However, this development is not only confined to Ola. In April month, the total EV sales in India stood at 1,12,396 units, which reflects only a 1 % minuscule increase from the month of March. 


However, it would be absurd to claim EV a failed experiment without considering all the variables at play. For instance, all the EV companies have not observed a dramatic slowdown, hence contributing to the growth of the industry despite a smaller margin. For example,

Joy Electric Bikes

which sold only 931 units in March, was able to sell 1205 electric bikes in April. So what factor has been changed and how come different EV companies are showing different trends in the existing structure of the market? Let's take a deep dive into the matter.


The Conclusion of the FAME-2 Subsidy


The government of India’s intent to promote electric vehicles was endorsed by a subsidy scheme called Faster Adoption and Manufacturing of Hybrid and

Electric Vehicles

(FAME II). Announced in 2019, the scheme proposed a subsidy of Rs 5000 per kwh on the purchase of an electric vehicle. No doubt, the scheme led to a massive development of the EV ecosystem in the Indian automobile sector. However, the government of India’s decision to take off these training wheels from the Indian EV Industry and conclude it by March 31, was heavily marketed by the companies to create a FOMO in the market. This marketing technique led to some-what panic buying from the customers which increased the March sales data many folds. Altogether, the ending of a heavy subsidy and the marketing technique resulted in a falling Month-on-Month growth graph. 


To take a more border perspective take the example of

TVS electric vehicles

. Although the company has shown a negative month-on-month growth from March to April i.e. -71.23%, the Year-on-Year growth of the company shows a promising increase of 25%. Hence, it is safe to conclude that the fall in sales growth is a mere seasonal or circumstantial outcome rather than a substantive one. 


Case study of Ather Energy and reason for sales decline


Another reason for a significant decline in the sales volumes of the company is increasing competition and “pre-launch” marketing. For example, companies like

Ather

whose family scooters Ritza and Apex are yet to come have shown a promising 89.76% MoM growth in March which now has come at -76.58%. Similarly, the shift of the spotlight in the Ampere fleet has been switched from its existing line of EVs to the upcoming “Nex Big Thing” contributing to the decline of the company’s sales from 3145 to 2511 units, hence, registering a growth of -16.58 %.


Need for a revised strategy  


Other Companies like

Bajaj

observed a fall in their sales from 21,256 units to 7515 EVs from March to April and are in need of revising their marketing strategy to compete with the changing dynamics of the market. Bajaj, playing on their already existing face value needs a new electric scooter other than the revamp of the traditional Chetak series. EVINDIA believe it is now high time that the company recognizes the need of the hour and unveils a new riding companion.


Similarly,

Hero Vida

whose sales faced a major blow striking the data from 4060 to 946 units in the same period, also requires change in the existing offerings. For instance, Hero’s way of providing electric scooters at pre-FAME-2 ending prices via Flipkart offers has shown limited success in comparison. Meanwhile, when companies like Ola in an out-of-the-box marketing strategy reduced their ex-factory price, Hero paid limited attention to any new strategy. 


So is EV the future or not?


The recent sore in EV sales is indicative of the changing EV scenario which needs an active intervention from the companies to sustain the EV ecosystem. Moreover, we have seen various efforts from the companies to overcome the existing difficulties that majorly occurred due to the conclusion of the FAME-2 subsidy. The government also understands the pragmatic nature of the problem and hence enrolled a new yet comparatively lighter subsidy scheme– the Electric Mobility Promotion Scheme (EMPS), 2024, which will provide a maximum subsidy of Rs 10,000. Hence, it is safe to conclude that with the constant efforts from the EV OEMs and government intervention, the EVs are here to stay.

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