In a rather surprising yet serious turn of events, it has been reported that seven major electric two-wheeler manufacturers have revealed their intention to approach customers for refunds. Yes, you heard that right. The following companies are planning to ask their customers for refunds. The EV automakers are Okinawa, Hero Electric, Ampere, Revolt, Benling, Amo Mobility, and LML. All of these automakers are members of the Society of Manufacturers for Electric Vehicles (SMEV). They will soon be asking their customers to refund their FAME-II subsidies as the Ministry of Heavy Industries has asked them to return the subsidies they were provided due to technical implications.
The FAME-II refund issue
The explanation for this whole situation is that these companies have decided on a unique way to respond to the notice issued by the Ministry of Heavy Industries (MHI). According to Autocar Pro, this move has been proposed by the above-mentioned EV automakers as a response to the MHI’s decision to revoke the certification of electric scooters that were sold between January 2020 and September 2022 under the FAME II scheme (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles). As per the report, these electric two-wheeler companies are preparing to authorize their dealer network to engage with their customers, requesting refunds for products sold at subsidized rates.
The public notice, which will be soon issued by the Society of Manufacturers for Electric Vehicles (SMEV), will state, “Customers of e-scooters are hereby notified that the Ministry of Heavy Industries has decided that the certification of electric scooters of these brands, that were sold during January 2020 and September 2022 and which were subsidized under the FAME II scheme, is being revoked due to technical reasons with retrospective effect.”
The notice will further elaborate on the details of the MHI’s decision to retrospectively revoke the certification of electric scooters sold during the mentioned timeframe. The key reason for this revocation, as stated in the notice to these automakers by MHI, is technical in nature. The move has left industry experts intrigued, as the retrospective nature of the decision raises questions about the technical compliance of the sold vehicles.
Industry experts share their opinion
Taking note of the situation, industry experts have raised concerns about the potential impact on customer sentiment. Some experts have stated, “It is unlikely that any customer would volunteer to refund money to electric vehicle makers, but dealers calling the customers and asking for their money back will certainly impact the sentiment around electric vehicles,” experts say. Experts have also stated that the move comes at a time when the adoption of electric vehicles is being actively encouraged to reduce carbon emissions and promote sustainable transportation solutions.
What will happen next?
According to the recent report, what will most likely happen is that the recovered subsidy amounts, if successfully reclaimed from customers, will be directed towards compensating the government for penalties imposed on these companies for failing to meet certification standards. The public notice from SMEV will state, “Customers must cooperate with the dealerships because they will be contacting them to refund the subsidies so that they can be returned to the Ministry of Heavy Industries.”
This public notice follows an earlier decision by SMEV on July 29, 2023. Initially, only Hero Electric, Benling, and Ammo Mobility were allowed to start this refund exercise. SMEV has, in a separate letter to the Ministry of Heavy Industries, sought clarification on the basis for the refund request. The association has also raised pertinent questions about the legal and regulatory provisions behind the demand for subsidy refunds from the OEMs. Furthermore, SMEV has questioned the rationale from the Ministry of Heavy Industries for not seeking refunds directly from end customers who directly benefited from the subsidies.
From this whole situation, we can understand that SMEV has boldly contested the MHI’s decision to claim subsidy refunds, alleging that the move lacks a valid basis and contradicts established norms and policy rules. The association believes that these actions might not withstand rigorous legal scrutiny, further underlining the complexity of the situation.
SMEVs response
In a statement, SMEV expressed empathy towards OEMs facing pressure due to this unprecedented situation. The association believes that the current scenario might eventually cause discomfort for the Ministry and might require rectification. However, SMEV has avoided making judgments on OEMs that might be involved in misrepresentation or misappropriation.
SMEV, in its official statement, stated, “SMEV expresses understanding for OEMs that may feel pressured to comply with this irregularity. We believe that this situation may eventually create embarrassment for the Ministry and may be rectified. However, if any OEM has engaged in misrepresentation or misappropriation and acknowledges it, as was the case with four OEMs previously, SMEV refrains from commenting, and such OEMs may pursue settlements as they see fit,” the association claimed in a statement.”
