Electric scooter cos to refund charger cost to customers

The move follows discussions between the automakers and the ministry of heavy industries after it moved to investigate the companies over allegations of billing smart chargers and performance and feature-related software packs separately from the scooter to achieve an ex-factory cost of ₹150,000, the ceiling price which OEMs need to meet to qualify for incentives under the government’s Fame-II scheme. The scheme offers up to 40% subsidy, amounting to as high as ₹60,000 per scooter. The ministry has asked the OEMs to offer a refund to customers for the amount they’ve paid for the chargers retrospectively.

The OEMs have already absorbed the cost of the chargers and reconfigured products to meet the ₹1.5 lakh ceiling, but the ministry is urging they take retrospective action. Ola, also a contender for the Production Linked Incentive (PLI) scheme for advanced chemistry cells, the people said, has decided to abide by the ministry’s directive. The rest of the OEMs are expected to follow suit within the week, as the government has held up the release of subsidies till a decision is made.

“Now that there is a precedent, other OEMs will have to follow. Subsidies worth ₹700-800 crore have been blocked in this matter, and for individual OEMs, ₹300-350 crore blocked in working capital makes it very difficult to do business. The scrutiny is fair because the government did find a lot of issues in the first lot of complaints they investigated, but doing this exercise (to refund customers) is a big hit. It will cost us about ₹150 crore," a senior executive at one of the OEMs named above said on condition of anonymity.

Disbursal of Fame-II subsidies, which had been accruing for several months, has been blocked since early March. OEMs charge between ₹9,000 (in the case of the Ola S1 scooter) and ₹20,000 (Ather, Hero MotoCorp) for an on-board fast charger.

Ather and Ola have begun to bundle on-board chargers within the ex-factory price of their scooters though the companies have replaced the fast chargers that customers earlier had to buy separately with slow chargers. Customers can purchase a fast charger as an accessory by paying an extra cost.

Ather Energy has also phased out a variant of its scooter Ather 450, called the 450 Plus, and introduced a base variant of the 450X scooter with the same battery pack and range, with an option to buy all the additional features at an extra price.

“While there is no legal requirement incumbent on us to refund this money to the customer and nowhere in the FAME-II documents is it stated that chargers can’t be billed separately, the MHI argument is it is about the spirit of law more than the letter of law. At least once the pond is cleared up for good, we can get back to business as usual," the executive said.

The ministry has also suspended subsidies for at least two OEMs, Hero Electric and Okinawa Autotech, as a result of their investigations into the companies’ failure to adhere to the Fame-II schemes’ localization criteria.