Why Pure EV not applied for Fame II Scheme Subsidies

Here are the reasons in the press note shared by the company-Pure EV. 

Pure EV not Applied Fame II Scheme Subsidies

1. TECHNICAL COMPLIANCE 

• Our scooters are technically subsidy scheme compliant in terms of all the technical performance parameters.

2.  THE GLOBAL SUPPLY CHAIN AND MULTIPLE SUPPLIERS FOR EACH KEY COMPONENT

• The company has kept the brand away from this subsidy scheme since its inception in 2019 and since the launch of our first high-speed 2W in February 2020, to keep the flexibility of having access to the global supply chain and working with multiple suppliers for each component whether they are domestic or international, which is currently not being allowed under the subsidy scheme.
• Ultimately, the company believes that the EV domain belongs to the automotive industry and in a rapidly emerging segment, and it is imperative for us to establish the brand in the market by working with the best possible suppliers.
• As of now, many parts like key packaging materials and critical electronic components used in our products, are not produced in India and even where it is being manufactured, it is not meeting our requirements wrt the quality, turnaround time, price, scale of manufacturing and indeed spare parts supply on short notice.
• We have registered suppliers across India, China, Taiwan, South Korea, the USA and the UK, which ensures that our product doesn’t slow down even in the case of supply chain disruptions across some specific geographies. In the last 15 months including during the multiple lockdown periods too and facing huge supply chain disruptions ourselves.
• We kept growing exponentially across Pan India and became one of the top 4 EV2W companies in the short span of 12 months.
• On the other hand, our key competitors faced severe challenges in manufacturing their various models and leading to the shutting down of many of their dealers due to the inability to supply goods.
• The only reason behind this success in the short span of time is our focus on serving and delivering a quality product at the right price point of view with world-class battery technology.
• We are the only EV 2W company in India with the topmost gross margins, and indeed making positive EBIDTA/PAT margins, and filing advanced income tax payments. We have been providing the best margins in the EV 2W industry to our dealer channel partners.
• The above proves the financial stability of the company as an OEM and commitment for the long term sustainability of our dealers as well, which is key for any client to buy our product. 

3. BENCHMARKING WRT REPUTED AUTO OEMS

• Maruti, Tata like auto giants still firmly believe in diversifying the supply chain even after being multi decade-old companies and keep it global to serve their customers with the best-in-class product at the right price point.
• Recently, BAJAJ (Chetak) has also pulled itself out of this subsidy scheme, as they might have understood its drawbacks.

4. IMPACTS ON CONSTANT INNOVATION IN THE PRODUCT

• The main reason to keep our brand away from this subsidy scheme is that we see it as a constraint in the constant innovation of key components and improving the user experience. Once a vehicle is certified under this subsidy scheme, then changing the component supplier is not an easy process and so anytime OEM wants to make even a change of supplier for a key component, then they must seek approval from the concerned going through a lengthy process.
• We do not want to get ourselves constrained into such complex paperwork matters and indeed, we don’t want to compromise with our design philosophy, quality processes and constant innovations, so that is why since the beginning of this subsidy came in 2019, we kept ourselves away from this scheme.
• We use many/all components which are being manufactured within India and we have multiple suppliers from India for each key component, but the main argument here is that it must meet the timelines, continuous improvement such component as per the innovation we want to do and not of any inferior quality.
• Hence, our goal is that nobody who is attached to our brand either you as a client or our dealers should suffer after opting for our vehicle/brand because some scheme is restricting us to act agile and innovative.

5. DYNAMICALLY FLUCTUATING SCHEME

• This subsidy scheme is prone to frequent changes as we have already seen many changes in the past 2 years, which has significantly impacted the deployment and sales of those vehicles under this scheme for those specific time periods.
• Initially, the subsidy was announced for all the electric 2W, and later it was confined to High-speed 2W, then furthermore changes took place on the performance parameters and now the policy asks that every single component should be Made in India.
• These kinds of fluctuations affect the continuity of the same kind of models in the market and at the end, customers are the one who suffers, besides dealers too on the losing side as many times certain models are discontinued and they do not have the spare parts for those discontinued models.
• We firmly believe that we are not in a seasonal fruit business that new models are aggressively made available whenever such kind of schemes are available, and they are pulled out/slowed down the moment there are any policy fluctuations.
• We passionately believe that we are selling a product in the market to build a trustworthy brand and consumers choose our products because there is a strong value addition to their lifestyle and user experience.

6. DEVIATIONS IN THE CURRENT MARKET SITUATION

• We believe that this subsidy hike is a temporary heal to the EV2W OEMs as all (except our company) have been making significant losses, and there is heavy inflation in the prices of key raw materials of EV 2W.
• The announcement coincides with the rapidly increasing petrol prices and it would be extraordinarily difficult to continue providing this high quantum of subsidy even in the shorter term. Hence, all these EV OEMs will go for price hike of their models very soon.
• It is imperative for us to sustain our dealers through continuous cash flow mechanism for the next many years or decade long, rather than them being subjected to go through the flip flop and fluctuations in model’s continuity, stock continuity, price continuity, components continuity, which are potentially arising from the frequent changes in the subsidy scheme.
• If our dealers are affected, then our clients to are affected in the long run.

7. ONGOING NON-COMPLIANCE IN THE SUBSIDY SCHEME

• There is an NCR based EV OEM that is a 100% Chinese owned company. After making minimal changes locally in components’ tags and documents, and they have managed to avail the subsidy benefits.
• So, we don’t want to comment on the improper implementation of the scheme or how are they are awarding the certifications.
• The majority of the EV OEMs have been availing this scheme without following the rules in “letter and spirit”.

8. ONLINE REVISED PRICES VS ACTUALS

• Many of these companies have started posting on their web pages about the reduced prices but almost none of their dealers have the stock available at the reduced prices, and/or they are still providing quotations at prices that are much higher than the prices published by their respective OEMs on their websites.
• Either they will tell you the old prices or tell the increased ex-showroom prices and higher RTO & Insurance charges/mandatory accessories to adjust this additional subsidy amount.
• The subsidy scheme insists on the comprehensive warranty for three years as a mandatory rule; however, many OEMs are charging for the extended warranty.

9. ARTIFICIAL SCARCITY OF STOCKS

• Stock is not going to be available for a longer time at the competitor dealer outlets on the reduced prices and after taking a lot of bookings, they will come back with their new models and increase the base prices.
• So ultimately customers are not going to get the benefit of this scheme as intended.

10. IMPACTS ON BUSINESS CONTINUITY

• Every time to avail the benefit of the subsidy scheme, many companies have stopped production of their previous models and came up with a new one to increase the base price and adjust the subsidy amounts to jack up the final price to the end client.
• As a result of this step, customers were stopped getting their various damaged spare parts in later stages when they went for servicing of their product.
• There were also proven posts on social media that the companies are collecting post-dated cheques from clients as an additional security amount from the clients just at the time of the vehicle delivery, which matches the subsidy amount.
• On the other hand, we have constantly kept our two main models continue to evolve, and strengthen their position in the market in a rock-solid manner and we ensure that for the next so many years or even after a decade, you will be able to see the same product names in the market from our brand with a lot of innovations and get better services, and indeed having the spare parts available.

11. WEAK FINANCIALS AND UNSUSTAINABLE BUSINESS STRATEGY

• All the EV 2W companies (except our company) are barely able to sustain financially in spite of these heavy subsidy amounts.
• Their business models are not backed up by key core technology like Battery innovation and their financial models do not have a backup of the cost innovations. They don’t care for the sustainability of their dealers as well and kept the partner margins very thin.
• These negative financial parameters are a threat to the end client, as the product requires the sustainability of the dealer in the long run and OEMs needs to have profits in their balance sheet to spend money on the after-sales service and warranty replacements over 3 to 5 years.
• Even one of the biggest EV 2W OEM, which is 15 years old in this EV2W industry in India and has the highest share in the Indian E2W market suffering from huge losses as independently verifiable from their financial statements filed with the ROC. And the question to be asked is why they are not able to sustain the business even with huge subsidies in spite of being in the market for more than 15 years.
• How long further they need the taxpayers’ money to support their losses, and they also did not invest in any key technology to cut down the prices of key components.
• On their website, they have mentioned around 1000+ dealers/touchpoints are present out of which around 500-600 doesn’t even pick the call or shut down their dealership outlets. Major outlets have shut down for the battery failures, subsidy amounts not being credited by the OEM to the dealer and they have more vehicles in the service workshop compared to their sales etc.
• We are the only EV 2W company in India with the topmost gross margins, and indeed making positive EBIDTA/PAT margins, and filing advanced income tax payments. We have been providing the best margins in the EV 2W industry to our dealer channel partners.
• The above proves the financial stability of the company as an OEM and commitment to the sustainability of our dealers as well, which is key for any client to buy our product.

12. TOTAL LIFETIME COST OF OWNERSHIP

• We ensure the least total lifetime cost of ownership by providing you with the best range between 90-120 Kms in a single charge. There are many clients who are claiming range numbers of 130 and 140 KM as well.
• We have an in-house battery manufacturing unit with the dedicated R & D team based out of the Research Park of a premier institute, which gives us the autonomy to work on further innovation and reduction in the prices of battery.
• The total odometer readings of various clients have been one of the highest for both of our models across the entire EV 2W industry when we compare with the per day and per-client basis analytics.
• This shows the reliability of these vehicles/batteries on-road and even if you pay few extra bucks today, your net savings are much higher compared to other EVs.
• We assure the quality and the least total lifetime cost for you.

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