Ola, Ather, TVS to refund nearly Rs 300 crore to customers

The Ministry of Heavy Industries' (MHI) tightened scrutiny of EV manufacturers has yielded a total refund of over Rs 800 crore, with the EV industry obligated to refund Rs 292.23 crore to the customer. The remainder Rs 545 crore is the estimated FAME-II subsidy recoveries amount, even as MHI begins the overall Rs 1,500 crore subsidy detangling process. This development is a direct result of the Prime Minister's Office expressing concern about the slowing of India's EV sales as a result of the FAME-II impasse.

MHI has received the majority of inputs from its testing agencies, ICAT & ARAI, which have been investigating the FAME-II subsidy violation issue, based on which over Rs 800 crore in recoveries are planned.

Following a significant increase in March, electric two-wheeler registrations fell by about 23 percent month on month (MoM) in April, owing to ongoing issues and uncertainty surrounding the Centre's FAME-II scheme.

Tarun Kapoor, advisor to the Prime Minister of India, in response to India's slowing EV industry stated that "there is a need for all sustainability and clean energy stakeholders to come together and support India in becoming a world leader in the green energy transition".

According to Vahan data, there were 66,410 two-wheeler EV registrations in April, compared to 86,187 units in March. Electric two-wheelers costing up to Rs 1.50 lakh per unit are eligible for benefits under the Rs 10,000 crore programme, according to the FAME policy document.

The EV charger refund saga

Responding to complaints from an anonymous whistleblower on Ola Electric, Hero MotoCorp, Ather Energy and TVS, MHI enlisted the assistance of ARAI, ICAT and IFCI. They discovered that these manufacturers were allegedly overcharging consumers by selling portable chargers separately, although these are supposed to be included in the price of the electric vehicles.

Following these manufacturers' convictions, Ola Electric has agreed to refund Rs 130 crore and Ather Energy has agreed to refund Rs 140 crore to MHI. TVS Motors will refund ‘less than Rs 20 crore’, while Hero MotoCorp is liable for Rs 2.23 crore.

According to MHI sources, testing agencies (ARAI and ICAT) have submitted their reports on Ather, TVS and Ola Electric. The companies announced – in their letters to ARAI – that "of their own volition, they will reimburse 100 percent of the cost of the portable charger to all consumers who purchased it as an accessory while purchasing an e-two-wheeler from its authorised dealerships." Hero MotoCorp has also informed that it is willing to reimburse customers for the cost of portable chargers, added MHI sources.

The following are the approximate reimbursements that companies will provide to their customers: Ather Energy will reimburse Rs 140 crore to 95,000 customers who purchased the Ather 450X between January 1 and April 12, 2023, and Ola Electric will refund Rs 130 crore to 1 lakh customers who purchased the Ola S1 between the beginning of the year and March 30, 2023.

Furthermore, MHI will recover Rs 25 crore from Ather for reduced battery capacity, as a result of the failure to purchase the upgraded software. TVS will refund Rs 15.61 crore to 87,000 customers who purchased the TVS iQube between May 2022 and March 2023.

Hero MotoCorp will reimburse Rs 2.23 crore to 1,100 customers who purchased Vida V1 e-scooters from the start until March 2023.

According to MHI sources, "the letters also mentioned that a duly certified statement will be submitted to the testing agency as proof of receipt of the amount by the consumers once the amounts due are paid."

What about Hero Electric, Okinawa and other EV players?

Other EV manufacturers, such as Hero Electric and Okinawa, will have their pending subsidies activated once they pay close to Rs 220 crore in penalties for allegedly violating domestic value-added norms, importing components from China and other markets, and falsely claiming subsidies. It has been learnt from MHI sources that there were letters from the Industry asking for recall of subsidies close to Rs 220 crore, with Okinawa having to pay in excess of Rs 120 crore.

Hero Electric has confirmed that they have received such a letter on April 1 from MHI. "The issue arose as a result of a difference in interpretation of the validity of FAME certificates versus the policy's stipulated deadlines," the company's CEO Sohinder Gill told our sister publication Autocar Professional. "We checked the FAME localisation guidelines during the applicable period and discovered that our bikes fully comply with the CMVR and FAME certificates and their extensions during the applicable period. As a result, the issue of refunds and the like is moot. We are in active discussions with the CMVR testing agencies and MHI to resolve this as soon as possible. We are confident that there will be no problems or disagreements with the Ministry on this account."

While MHI sources confirm that a similar letter has been sent to Okinawa, company officials denied having received such communication. Okinawa Autotech's MD and Founder, Jeetender Sharma, denied receiving any notice from the government to refund subsidies for 2019-20 and expressed surprise at the media questions.

Sharma is optimistic that the problem will be resolved soon. "We believe the government will be fair in its assessments and that its decision will be consistent across all industry players, not just Okinawa Autotech. Meanwhile, we expect the government to resolve the issue of pending subsidies that have been on hold for the last 12 months."

The total pending recoveries for failure to comply with FAME-II norms for the remaining 63 manufacturers are close to Rs 350-400 crore. The MHI has directed ARAI, ICAT and independent monitoring bodies such as the IFCI, to conduct investigations into other EV manufacturers as soon as possible in order to resolve the pending subsidy issue.

The SMEV spokesperson characterised the news about the Ministry issuing clean chits to various companies as a step in the right direction, adding that the sector was desperate for a resolution to the subsidy blockade that has all but choked the sector for the previous 15 months.

The EV industry's governing body has stated that MHI must now take a more sympathetic stance towards early adopters of the EV ecosystem such as Hero Electric, Okinawa and Ampere. These companies were market leaders with 82 percent market share in FY19 and FY20, but have reported a drastic drop in sales and can only muster a 24 percent market share in April '23.

"There are various ways to look at the subsidy and pricing issues, but at their most basic level, they are simply the teething troubles of a nascent industry," said an SMEV representative.

The Centre provides financial assistance to electric vehicle manufacturers through its FAME-II incentive scheme. These firms can offer up to 40 percent of the cost of locally manufactured vehicles and claim a subsidy from the MHI, which has set aside a total of Rs 10,000 crore for demand-based incentives to drive clean energy into the sector.

The Ministry, for its part, is doing everything possible to process the "various complaints about other companies," and the investigation of the testing agencies will be completed soon. "The ministry is committed to ensuring a fair and just outcome for all manufacturers involved, and will take appropriate action based on the report's findings," said a senior official.

What remains to be seen is how this refund process takes shape, and how each customer will get their amounts back.