Electric cars have been denied incentives under the new electric vehicle scheme — PM E-DRIVE — announced last week.

The scheme has announced funds to the tune of ₹3,679 crore to incentivise electric two- and three-wheelers, e-ambulances and e-trucks but not e-cars.

Road transport and highways minister Nitin Gadkari had indicated electric cars will be left out of the successor to FAME, the earlier incentive scheme.

He had said electric cars will no longer need to be subsidised because of falling battery prices, and that within two to three years electric cars, petrol cars and diesel cars will cost the same.

In fact, after FAME II, which supported 55,000 electric cars, the Electric Mobility Promotion Scheme (EMPS), which expires in September, did not provide subsidies to electric cars.

The government continues to tax electric cars at the lowest rate of 5 per cent compared with hybrids at 28 per cent and ICE vehicles at 49 per cent.

Many players are relieved at the continuation of GST. But sales have been on the downslide with hybrid sales surpassing EVs both in 2023 and 2024.

August recorded the lowest monthly sales of 2024, with just over 6,300 cars registered, a 10 per cent decline compared with August 2023, according to data from FADA.

Total electric vehicle sales in August dropped to 6,338 units from 7,549 units in July and 7,040 units a year ago.

The central government is relying on low GST as well as the PLI schemes for auto components and advanced cell chemistry batteries to drive EV sales in cars.

The PLI scheme, which sees participation by all major OEMs, will make manufacturing costs cheaper.

The OEMs are expected to pass on the benefits to their customers which, in turn, is expected to drive adoption.