After Dip In EV Sales, Tata Motors Pins Hopes On FAME-III For Revival

What The Indian EV Sector Expects From Union Budget 2024

After facing a dip in the sales of Electric Vehicles (EVs) in Q1FY25, Tata Motors has pinned hopes on the rollout of the FAME-III scheme for the revival of its electric vehicle business. The top management of the company said that the fleet segment of its EVs which used to be around 10 percent of its EV sales have dropped to 5%-6% in the latest quarter (Q1). The firm attributed this to the halt to the FAME-II scheme, which gave a much needed boost to the EV sector in India.

The company now believes another round of hand-holding support from the government could revive its sales again. “Fleet segment is typically in EV, 10% of the EV sales. That is how it had been in FY 2024, which dropped to 5% to 6% in Q1. The reason is that in Q4, because FAME II was expiring, in Q4, we saw two to three times jump in the fleet sales as a pre-buy and that actually led to Q1 declining significantly to the extent of 45-50%. And that has continued and overflown to July also because there is also an expectation of a FAME III announcement, which fleet owners would like to wait for. So this is what’s really happening as far as the fleet segment is concerned,” Shailesh Chandra, MD of Tata Motors Electric Mobility Limited (TPEML) told investors recently in the investors call.

“Although we have been in continuous discussion with the government, we are hoping that the same FAME II categories of vehicles which were given the FAME benefit would continue. And it is very important that this segment is promoted because the direction of Niti Aayog, when they framed the EV policy, it was focused on connected, electric and shared mobility. So I think government is very much focused on shared mobility. So we do expect, but we have to really wait and see as and when it comes,” Chandra added. 

As per the details furnished by the company, the company has deployed more than 160 electric buses in Q1. With this, the total number of electric buses deployed by the company touched 2,900. On its commercial transport vehicle-ACE EV, it said that after the discontinuation of FAME-II scheme, the firm had launched Ace EV with 1 ton payload. Tata Motors said that it has deployed more than 800 such units in Q1. 

However, the FAME-II discontinuation seems to have dented the avenues of the automobile firm. “On the EV side, while the personal segment has remained steady, we have seen a sharp year-on-year decline in the fleet demand post expiry of the FAME II in March 2024, a quarter in which we saw a substantial amount of pre-buys. This is reflected in our lower offtakes and market share for the quarter. Our journey towards increasing EV penetration expanding product portfolio at various price point continues.,” Dhiman Gupta, Vice President (Finance) of TPEML said in the investors call.