The impact of reduction in fame-2 subsidies is now getting percolated to EV component suppliers. Sona Comstar, a leading automotive component supplier, witnessed a reduction in its traction motor sales on account of lower production by the electric two-wheeler OEMs.
Vivek Vikram Singh, MD and Group CEO of Sona Comstar, said, “The reduction in FAME-II subsidies has resulted in lower production by the electric two-wheeler industry, thus impacting our traction motor sales.” He added that despite it, the company’s revenues from the BEV segment grew by 13% on a year-on-year basis during Q1FY24, representing 26% of overall revenues, which stood at Rs 732 crore, with 24% YoY growth. The net profit of the company grew to Rs 112 crore, with a net profit margin of 15.3% and 48% YoY growth.
The company’s EV programmes contributed 78% to the net order book of Rs 22,000 crore as of June 30, 2023.
The development comes a few days after Minister of State for Heavy Industries, Krishan Pal Gurjar, stated in a written reply in the Lok Sabha on Tuesday that there is no proposal to launch the FAME III scheme at present.
After the rationalisation of subsidies in May, the sale of electric two-wheelers had already witnessed a significant fall in growth in June, and with vehicle prices moving up again, there is a fear that the transition to 100 percent electric vehicles for two- and three-wheelers may take longer than anticipated.
The Ministry of Heavy Industries had formulated the Faster Adoption and Manufacturing of Electric Vehicles in India Phase II (FAME India Phase II) Scheme for a period of five years commencing April 1, 2019, with a total budgetary support of Rs 10,000 crore. This phase mainly focused on supporting the electrification of public and shared transportation, and had the aim of supporting demand incentives for 7090 e-buses, 5 lakh e-3 Wheelers, 55,000 e-4 wheel Passenger Cars, and 10 lakh e-2 Wheelers. In addition, the creation of charging infrastructure is also supported under the Scheme.
So far, under the phase-II of FAME India Scheme, about 7,40,722 electric two-wheelers have been sold as on 20.07.2023. Further, the Ministry of Heavy Industries has sanctioned 6315 electric buses to 65 cities/STUs/State Govt. entities for intracity operations, stated a press note from PIB.
There are reports that the government has begun working on the third phase of FAME III, which is likely to include hydrogen-powered vehicles, additional support for electric three-wheelers, and a curtailed version for two-wheelers.
On misappropriation of subsidies, the press note elaborated that the Ministry of Heavy Industries had received seventeen complaints regarding the same, and they were mainly related to the violation of Phased Manufacturing Programme (PMP) guidelines under FAME India Scheme Phase-II.
Key developments during Q1 FY24
A North American New Age OEM has awarded the company a programme to supply Differential assemblies for their upcoming Electric Class 5 truck. This programme added Rs 405 crore to the order book, and production will likely commence in Q4 FY25.
Sona Comstar has received an order from an Indian two-wheeler OEM to supply hub-wheel traction motors for their upcoming electric scooter model. This programme added Rs. 360 crore to the company’s order book. Production is likely to commence in Q4 of FY24.
The company has been awarded a new programme by an Indian OEM of Electric OHVs and 3-wheelers to supply mid-drive traction motors and controllers for their upcoming electric OHV model. This programme added Rs 90 crore to the order book. The production will likely commence in Q4 of FY24.
A Global OEM of recreational Off-highway vehicles has awarded the company a programme to supply Final Drive Differential assemblies for their recreational OHVs. This programme has added Rs 430 crore to the order book, and the start of production is likely in Q2 FY25. This order wins Sona Comstar’s entry into a new mobility segment, i.e., recreational OHVs.
The company signed a technology licensing agreement with Equipmake, a UK-based technology company that has developed high-performance electric powertrains. Under the agreement, Equipmake will license certain patented spoke motor and inverter technology in the power range of 100kW to 440 kW to Sona Comstar to manufacture and sell EV Powertrains, sub-systems, and components for electric cars, buses, commercial vehicles, and off-road vehicles.
Sona Comstar has exclusive rights to sell drive motors, inverters, and drivetrains for the target applications in the licensed territory of India, Thailand, and select South Asian markets. The company will manufacture drive motors, inverters, and drivetrains for the target applications, supply them to its customers in the licensed territories, and Equipmake for other markets.
Also read: Several EV makers may be forced to file for bankruptcy post imposition of FAME II penalties