Ola, Ather, TVS Motor and Vida under Government investigation for wrongly claiming EV subsidies

Four of the country’s largest electric two-wheeler manufacturers namely Ola, Ather, TVS Motor, and Vida have recently come under the interrogation lights of the Government of India for artificially keeping the prices of their products lower to claim subsidies. According to senior government officials, the aforementioned EV automakers are being investigated for allegedly underpricing their electric two-wheelers in order to qualify for subsidies under the Faster Adoption & Manufacturing of Electric Vehicles (FAME) program. They continued by asserting that the EV manufacturers may have falsely claimed at least Rs 300 crores in incentives.

As per the report, following a whistleblower complaint that these four companies had fraudulently claimed subsidies totaling at least Rs 300 crore by invoicing essential components like the charger and proprietary software separately from the two-wheeler, the Ministry of Heavy Industries launched the most recent investigation. The corporations have been contacted by the authorities over these claims.

The ministry has mandated the Automotive Research Association of India to conduct the probe on this case involving the EV automakers. Furthermore, it was also stated in the report that the government is also looking at almost a dozen other electric two-wheeler producers separately for allegedly failing to satisfy localization commitments under the scheme.

As of yet, only the country’s largest EV two wheeler manufacturer Ola has replied to the situation. The Bengaluru based EV maker has denied all the allegations and stated that currently it has not received any notice from the ministry in regards to this case. Meanwhile all the other three manufacturers – TVS Motor, and Vida have refrained from the commenting on this situation and no response has been received from them.

Other sources have stated that some of these EV manufacturers have asserted that customers occasionally buy multiple vehicles and don’t always require a separate charger for each vehicle. They also contended that certain add-on software is marketed to improve the user experience and was not a necessary component of the vehicle so those get charged separately.

The Industry association Society of Manufacturers of Electric Vehicles commented on the case by stating, “Lately we have seen the phrase ‘misappropriation of funds’ being tagged on to dozens of original equipment manufacturers. There is a need to separate genuine cases and the mala fide ones before putting the label that irreparably destroys the very foundation of an organisation,”

Companies can claim a government subsidy by giving their buyers a discount of up to 40% off the retail value. This allows companies to boost EV sales by lowering their price. A total of Rs 2,000 crore has been set aside under the scheme’s Phase II to provide financial support for manufacturers of electric two-wheelers.

Phase-II of the FAME Scheme was approved by the government with a budget of Rs. 10,000 crore for a three-year term beginning on April 1, 2019. About 86 percent of the entire financial assistance was set aside for the Demand Incentive in order to boost the market for xEVs in the nation. By supporting 7000 e-Buses, 5 lakh e-3 Wheelers, 55000 e-4 Wheeler Passenger Cars (including Strong Hybrid), and 10 lakh e-2 Wheelers, this phase was introduced in an attempt to create demand.