Background 

The introduction of EMPS has brought substantial changes to the EV landscape. Below is a brief comparison of how subsidy allocations have shifted over the years across various focus areas of sustainable mobility in the central government’s policies.

Table 1: Allocated subsidies across various focus areas

Evidently, despite substantial funds remaining unutilised under FAME-II scheme, it has not been carried forward under EMPS. 

Furthermore, the total allocated funds under the new policy have reduced with the implementation of EMPS. Additionally, the upfront demand subsidies have been reduced significantly across all vehicular categories along with withdrawal of demand subsidies for 4Ws and buses.

*Demand subsidy for 4Ws available only for commercial registration

Table 2: Demand subsidies across vehicular categories

With India being at a nascent stage in EV adoption, the decrease in demand subsidies have significantly impacted its sales across all vehicular categories. 

EV sales journey | FAME-I to EMPS

It is important to acknowledge that historically, upfront subsidies have been a key driver of EV demand and have proven instrumental in enabling the development of EV infrastructure in India. 

Figure 1: Historical trend of E-2W sales | 2021 - 2024

Among EVs, 2-wheelers (E-2Ws) have always dominated sales, accounting for a major share in India's economically developing transportation market. However, with the introduction of EMPS, the landscape has shifted. Manufacturers have responded by launching entry-level, stripped-down models to make EVs more affordable, but these have not been enough to boost sales back to pre-EMPS levels.

Figure 2: EV sales by category | 2024

As demonstrated by the data, sales have been on a downward trajectory since the implementation of EMPS, and the situation is particularly stark when we focus on states that were once leading the EV adoption charge.

Zooming in | EV sales in states with leading EV penetration

While EV penetration remains at a nascent stage across most of India, certain states, like Goa and Kerala, have emerged as first movers into a broader electric transition of E-2Ws. However, the reduction in demand subsidies has impacted even these front-runners.

Figure 3: Leading states with high E-2W penetration | 2024

The E-2W penetration in Goa is about four times the average E-2W penetration in India despite the absence of upfront demand subsidy under the state’s EV policy unlike many other states. In contrast, Kerala's comprehensive EV policy has not only boosted EV adoption but also helped drive higher overall sales numbers. You can explore our India State EV Rankings tool, which compares states across three key categories: Affordability Score, Charging Infrastructure Score, and Adoption Score.

However, reduction of upfront demand subsidy amount has significantly impacted the sales in India. Evidently, the dip in EV sales has been massive in states like Goa and Kerala.

*The sales numbers are forecasted for the months September - December, 2024.

Figure 4: E-2W sales comparison - Goa | 2023 vs 2024E

While the H1-2024 sales have been better than H1-2023, the sales in H2-2024 are expected to plummet with a slight uptick in E-2W during the year-end festive season.

Similarly, E-2W sales in Kerala are lower in 2024 compared to 2023. 

*The sales numbers are forecasted for the months September - December, 2024.

Figure 5: E-2W sales comparison - Kerala | 2023 vs 2024E

E-2W sales in Kerala are expected to substantially decrease in CY-2024 in comparison to sales dip in Goa. 

Conclusion

The shift from FAME-II to the EMPS has significantly reshaped the electric vehicle market in India. With reduced subsidies and the elimination of demand incentives for certain categories, the EV landscape is witnessing a notable slowdown, especially in states that had previously led in adoption, such as Goa and Kerala. While the introduction of stripped-down models has provided some price relief, it has not been enough to counterbalance the overall decline in sales. 

As India continues its journey towards sustainable mobility, it remains to be seen how both the government and industry stakeholders will navigate these new challenges to maintain the momentum of EV adoption. The recent market shift has also had a profound effect on Original Equipment Manufacturers (OEMs) that have heavily invested in building production capacity. This highlights the importance of creating a stable policy environment, where subsidy reductions are phased out gradually and clearly communicated. Such stability would give OEMs the confidence to make long-term investments, essential for the sustained growth of the EV market in India.

Disclaimer: The authors have utilised ChatGPT to enhance the language and clarity of this article.