Electric two-wheeler price hikes on anvil as PM E-Drive nears target

Electric two-wheeler makers prepare for the end of PM E-Drive incentives as subsidy allocations near exhaustion, raising the prospect of higher scooter prices

India’s leading electric two-wheeler (e2W) manufacturers have begun preparing for the end of the PM E-Drive subsidy scheme for electric vehicles (EVs). They are asking dealers to quickly submit pending subsidy claims as the scheme’s allocation nears exhaustion, signalling that customers may soon have to pay higher prices once the incentives are withdrawn. 

In a circular dated June 15, Bajaj Auto (BAL) instructed its Chetak scooter dealers to immediately upload all pending subsidy claims and said it would later communicate a “cut-off date” after which the PM E-Drive subsidy would be “removed from price”. Sources told Business Standard that other e2W makers, including TVS Motor and Hero MotoCorp have also sent similar communications to their dealer networks amid concerns that the scheme’s remaining allocation could be exhausted soon. 

The PM E-Drive scheme was launched by the Ministry of Heavy Industries in September 2024. For eligible e2W with an ex-showroom price below ₹1.5 lakh, the scheme currently offers incentives of up to ₹5,000 per vehicle. It targeted a volume cap of 2.479 million for subsidies, and the scheme would sunset once the target was achieved or on the end date of July 31, 2026. 

Under the scheme, customers receive the subsidy upfront in the form of a reduced purchase price. At the time of sale, a unique Aadhaar-linked e-voucher is generated and authenticated by both the buyer and dealer through a mobile application. Dealers subsequently upload the e-voucher and related claim documents on the PM E-Drive portal. They receive reimbursement after verification. BAL’s June 15 circular showed the PM E-Drive scheme was nearing exhaustion. Against the scheme’s target of subsidising 2.479 million e2Ws, around 2.329 million vehicles had already received incentives, leaving roughly 150,000 vehicles yet to receive subsidy payments as of June 15 morning. 

However, BAL also noted that buyer IDs had already been generated for the entire target volume. This means while a portion of the subsidies is yet to be disbursed, the scheme’s allocation may already be fully committed. This has prompted the company to ask dealers to expedite registrations and upload pending claims. 

 

The company directed dealers to upload all claims related to customer invoices — dated June 15 or earlier — by June 22. It also offered a safeguard to dealers for certain cases where subsidy claims could miss out because the scheme target gets exhausted before the claims are processed.

 

“For those cases uploaded between June 16 and June 22, BAL shall cover dealerships for any subsidy loss on account of registration VAHAN sales exceeding target sales on PM E-Drive portal,” the circular said.

 

The communication suggested BAL’s concern over the scheme’s allocation getting exhausted while dealers are still in the process of uploading pending claims.

 

For vehicles sold June 16 onwards, the company instructed dealers to complete registration and buyer ID generation within three days of invoicing and upload claims to the PM E-Drive portal within five days.

 

More significantly, Bajaj Auto informed dealers that it would soon announce a date on which subsidy benefits would cease.

 

“BAL shall subsequently communicate a cut-off date on which PM E-drive subsidy shall be removed from price. BAL will not cover subsidy amount for any customer invoices post the cut-off date for PM E-drive subsidy claim,” the circular said.

 

At the same time, the company directed dealers to continue extending subsidy benefits to customers until such a "cut-off date" is announced.

 

“Until BAL communicates the cut-off date, the dealer must continue offering PM E-Drive subsidy to the customer,” the circular said.

 

If a dealer sells an electric scooter after June 15, but before BAL announces the final cut-off date, the company will bear the subsidy cost if the quota runs out, but only if the dealer processes the paperwork within the aforementioned three- to five-day window. If the dealer exceeds the window and the portal is closed, they will have to bear the loss, as Bajaj Auto will deny coverage.

 

The withdrawal of PM E-Drive subsidies could raise the effective purchase price of e2W unless manufacturers absorb part of the impact through price reductions or other incentives. Sources said companies are evaluating the likely effect on demand and the extent to which they can cushion customers from the loss of government support.

 

BAL, TVS Motor and Hero MotoCorp did not respond to queries sent by Business Standard on this matter. Major e2W manufacturers participating in the PM E-Drive scheme include Bajaj Auto, TVS Motor Co, Hero MotoCorp, Ather Energy, Ola Electric, Greaves Electric Mobility, and Revolt Motors.

 

Sources told Business Standard that the end of PM E-Drive subsidies would free automakers from scheme-linked localisation requirements that were mandatory for claiming incentives. Without these conditions, e2W  makers could source a larger share of components from overseas suppliers, allowing them greater flexibility in supply chain management.

 

Sources said the withdrawal of subsidies could encourage the entry of new electric scooter brands that rely heavily on imported components, as such companies would no longer be at a pricing disadvantage compared with manufacturers availing government incentives.