FAME II not getting extension is setback for industry: Switch Mobility CEO

Switch Mobility, the electric vehicle arm of commercial vehicle major Ashok Leyland, recently obtained its FAME II certificate, and the scheme is ending for them on March 31

Switch Mobility India, the electric vehicle (EV) arm of commercial vehicle major Ashok Leyland, recently acquired its Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME II) certificate, with the scheme set to expire for the company on March 31. MAHESH BABU, the company’s chief executive officer, discusses concerns regarding the FAME policy, funding, and dealership expansion with Shine Jacob in an interview. Edited excerpts:

What is your opinion on the current status of the FAME II policy?
 

Regarding EVs, FAME II is concluding in March. Unfortunately, the government has yet to finalise FAME III, providing only an interim extension for two-wheelers and three-wheelers. I view this as a minor setback.

The industry consistently seeks policy continuity and clarity over time for effective operation. European governments and others typically plan three to five years ahead. Sudden changes outside this continuum can have repercussions.

While I appreciate the extension to certain segments, it poses challenges for us. We are in the process of introducing light commercial vehicles in the electric four-wheeler category — the IeV 3 and IeV 4.

We must realign sales, pricing, and other aspects to minimise customer impact. Overall, it’s a setback, but we remain confident in the government’s ability to devise a long-term policy. We are prepared even without subsidies.

Is it a concern for you and the industry?
 

The industry doesn’t seek perpetual subsidies. With clear visibility, we can collaborate with the government on a road map. We’re optimistic about our product’s performance with customers. However, adjusting pricing is necessary.

Originally, we were slated to receive a subsidy of Rs 2.93 lakh for the IeV 4. If we increase prices, sales may suffer. Consequently, we’re offering special discounts to offset this. Having obtained our FAME II certificate recently, funding won't be available after March 31.

What is the status of your external funding and Ashok Leyland equity infusion?
 

Ashok Leyland, our parent company, has already invested Rs 1,200 crore for the upcoming year. We are well-prepared for operations. Additionally, if further funding is required, the group is prepared to provide it. This business represents the future, and substantial growth is expected. We remain open to valuable partnerships.

You already have good advance orders for the IeV series. Are you utilising the Ashok Leyland dealership network?
 

We’ve signed memoranda of understanding for 13,000 units over two to three years with several players. Initially, we'll be present in 14 cities to establish the product.

Leveraging all Ashok Leyland dealerships, we’ll establish Switch sales areas with branding. Beginning with 14 cities and 36 to 45 touchpoints, expansion will occur quarterly, aiming for 60-70 touchpoints by year-end.

There seems to be a less aggressive approach in tender participation, such as the PM-eBus Sewa scheme. Why?
 

We adopt a selective and strategic approach to tender participation. Challenges include implementing a payment security framework and preparing infrastructure for new cities. Selectiveness is key, alongside ensuring reasonable pricing.

Our participation is based on strategy, profitability, and product alignment. With an order book of 1,200 vehicles and 600 already on the road, we’re positioned well.

Last year, we had a 20 per cent market share. Additionally, we hold the L1 position in Uttar Pradesh State Road Transport Corporation’s procurement of 100 electric buses, ensuring our capacity sustains us for the next five years.

Anticipating a sales dip in some segments due to elections, what is your perspective, particularly regarding EVs?
 

Election seasons typically boost economic activity, leading to increased vehicle, goods, and people movement compared to normal times.