PM E-DRIVE comes into effect tomorrow; 2W and 3W subsidies to halve from April

The new Rs 10,900-crore PM E-Drive scheme, which provides demand incentives for electric vehicles and supports charging infrastructure, will come into effect from tomorrow, Oct 1, according to an official gazette notification from the Ministry of Heavy Industries.

The scheme will be valid till March 31, 2026.

According to the notification, the subsidies for electric two-wheelers and three-wheelers will be halved from April 2025.

PM E-Drive scheme replaces the Rs 11,500-crore Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicle (FAME) II scheme, which expired in March. The temporary Rs 778-crore Electric Mobility Promotion Scheme (EMPS), which is valid till September 30, is being subsumed under the PM E-Drive.

The government aims to provide demand incentives worth Rs 3,679 crore on the purchase of electric two-wheelers, three-wheelers, ambulances and trucks, while Rs 7,171 crore has been set aside to boost the adoption of electric buses, improve public charging infrastructure and upgrade testing infrastructure.

The new scheme is more comprehensive and has a bigger outlay with more focus on public transport and charging infrastructure, compared with the five-year FAME II scheme. The scheme shows hints that the government plans to phase out subsidies to electric vehicle buyers gradually.

e2W, e3W

Autocar Professional had earlier reported that the PM E-Drive will start with the same subsidy level as the EMPS for electric two-wheelers and three-wheelers but in its second year the subsidies per vehicle for these two segments will be halved.

Under the EMPS, electric two-wheelers currently get a subsidy of Rs 5,000 per kWh subject to a cap of Rs 10,000 per vehicle. The subsidy will continue at the same level in this financial year under the new scheme but will be tapered down to Rs 2,500 per kWh with a cap of Rs 5,000 per vehicle from April 2025.

Similarly, e-rickshaws, which get a subsidy of Rs 5,000 per kWh with a cap of Rs 25,000 per vehicle and passenger and cargo electric autos, which receive a subsidy of Rs 5,000 per kWh with a cap of Rs 50,000 per vehicle under the current EMPS scheme, will continue to receive the same till the March end, but will be cut by half from April.

eBus

Electric buses get the highest allocation in the PM E-Drive scheme with a total of Rs 4,391 crore as the government looks to decarbonize the public transport space. The scheme will incentivise the procurement of 14,028 electric buses by state transport units and other public transport agencies.

Electric buses with a maximum ex-factory price of Rs 2 crore will get a subsidy of Rs 10,000 per kWh till the end of the scheme. The maximum limit for subsidy for electric buses with 10-12 meters has been set at Rs 35 lakh, while buses with 8-10 meters and 6-8 meters have a cap of Rs 25 lakh and Rs 20 lakh, respectively.

“Support for e-buses will be provided through state/ city transport undertakings (STUs) on operational expenditure (OPEX)/ gross cost contract (GCC) model. Procurement of e-buses on aggregation model through competitive bidding shall continue to be done by CESL,” the government said.

Nine cities with a population of more than 40 lakh, which includes Mumbai, Delhi, Bangalore, Hyderabad, Ahmedabad, Chennai, Kolkata, Surat and Pune, will be targeted initially.

eAmbulance, eTrucks

Unlike the earlier schemes, the government has this time included electric trucks and electric ambulances to be eligible for demand incentives under the PM E-Drive scheme. Electric trucks and electric ambulances have been allocated a total of Rs 500 crore each in the scheme. However, the current notification does have per-vehicle subsidy and criteria related to the segments.

The government has said that all such information related to incentives for electric trucks and electric ambulances will be notified separately after consultation with the Ministry of Health and Family Welfare, Ministry of Road Transport & Highways, state governments, testing agencies and other stakeholders.

Only those e-ambulances that meet the standards approved by the health ministry will be eligible for incentives, while incentives of electric trucks will be given only if consumers purchase the vehicle after scrapping an old truck.  

“e-trucks, incentive will be provided only against furnishing scrapping certificate issued by MoRTH authorised registered vehicle scrapping facility(ies) (RVSF) for ICE trucks of equal or higher gross vehicle weight (GVW). Transferability of RVSF scrapping certificate shall be as per norms of MoRTH. A monitoring system to confirm the scrapping certificate will be put in place,” the government said.

Charging Infra

The government has put a higher focus on improving the electric vehicle charging infrastructure this time by more than doubling the outlay for public charging stations to Rs 2,000 crore under the PM E-Drive scheme.

The scheme aims to support 22,100 fast chargers for electric four-wheelers, 1,800 fast chargers for electric buses and 48,400 fast chargers for electric two- and three-wheelers. Incentives for setting up charging stations will be facilitated with the involvement of central ministries, state governments, and Central Public Sector Enterprises.

“In addition to setting up EV charging infrastructure within city limits, the Scheme also envisages selected inter-city/ inter-state highways to be made EV ready. Routes for setting up chargers on highways will be identified in consultation with MoRTH and other stakeholders,” the government said.

The quantum of financial support, benchmark prices, number of guns and other technical parameters for setting up charging infrastructure, including support for upstream infrastructure, will be determined by Project Implementation and Sanctioning Committee in consultation with the power ministry and other stakeholders.

The government also noted that there will be flexibility in funding for setting up charging infrastructure to the extent of 100% of the cost of the project, including upstream power infrastructure.

Phased Manufacturing Program

To ensure localisation, the government has rolled out the Phased Manufacturing Program (PMP) that requires electric vehicle makers to source and assemble a significant number of electric vehicle components locally. OEMs were obliged to follow the PMP guidelines on localisation under the FAME scheme for the vehicles to be eligible for the subsidies.

The same PMP will have to be followed by the OEMs to be eligible for support under the PM E-DRIVE.  “However, MHI [Ministry of Heavy Industries] may amend PMP, keeping in view the evolution of EV ecosystem,” the government noted in the notification.

For charging infrastructure, a minimum of 50% percentage of domestic value addition in manufacturing of electric vehicle chargers is required, starting from December 1, to avail incentives under PM E-Drive.

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