EV lobby group calls for recovery of excess rebate from customers under FAME-II

The Society of Manufacturers of Electric Vehicles on Friday proposed recovery of the amount from customers who have been given excess rebates by some original equipment manufacturers under the FAME-II ((Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles) scheme. This comes amidst the burgeoning stalemate between the government and electric two-wheeler OEMs over the payments under the FAME-II subsidy, for the last 18 months.

In a letter to the ministry of heavy industries, the EV lobby proposes that customers can return the heavy discount offered by ineligible OEMs to the government as part of the penalty amount.

"Considering that your department levied a penalty on some OEMs a few months ago for overcharging the customers and then asked them to return the amounts, it is possible that the monies you are currently demanding from the other set of OEMs for non-compliance can be similarly recovered by them from the customers and returned to the Department," says Sanjay Kaul, Chief Evangelist, SMEV in the letter.

"Since the MHI is suggesting that the subsidies passed on to customers by OEMs now stand cancelled – due to technical reasons decided by MHI Department subsequently – the customers who have taken such subsidies can be asked to return these to OEMs in all fairness," he adds.

According to Kaul, OEMs are willing to either share the customer data with the ministry or "take out a public notice asking customers to deposit back the excess rebates they had received as subsidy, under the department's guidance."

The development comes months after the government initiated a probe against Ola Electric, Ather Energy, Hero MotoCorp and TVS Motors for overcharging customers and violating the FAME II (Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles) subsidy scheme, and withholding more than ₹1,200 crore in funds in relation to the same. An additional ₹400 crore has been stuck for OEMs in the premium end after the government accused OEMs of under-invoicing to bypass the FAME-II norms. The four OEMs have been asked to return the amount to the ministry before the resumption of the FAME-II subsidy. Of the four EV manufacturers, Ather Energy, Ola Electric and TVS Motors have concurred in offering refunds to customers.

Last month, the EV lobby informed the government think tank Niti Aayog that the government’s decision of withholding the FAME-II subsidy has led to several OEMs and startups shutting shops. The association implored Niti-Aayog to re-evaluate the current state of the FAME-II policy.

The EV lobby has also proposed to the finance ministry for the creation of  ₹3,000 crore rehabilitation fund to revive and sustain operations of OEMs which have been badly affected by the FAME  "subsidy blocks".

Notably, in May, the government reduced the incentive on electric two-wheelers under the FAME-II scheme from ₹15,000 per kWh to ₹10,000 per kWh. The cap on incentives for electric two-wheelers will be 15% of the ex-factory prices of vehicles against 40% earlier, the notification adds.