The Society of Manufacturers of Electric Vehicles (SMEV) has unveiled distressing findings from a preliminary audit conducted on behalf of seven E2W OEMs, who have been adversely affected by the decision of the Ministry of Heavy Industries to withhold FAME subsidies.
The audit underscores a potential cumulative financial blow of over Rs 9,000 crores to the impacted companies, based on conservative estimates. These projected losses encapsulate unpaid dues, interest, debt, erosion of market share, reputational damage, cost of capital, and potential recapitalisation.
The interim audit approximates the combined losses due to withheld subsidies, interest, debt, market loss, and related factors to be around Rs 9,075 crores since the MHI suspended subsidies in 2022.
Though an official audit is imperative to ascertain precise figures, industry insiders contend that these conservative estimates fall short of the actual toll.
Sanjay Kaul, Chief Evangelist of SMEV, highlighted the ironic disparity between discussions with potential investors involving a billion USD investment in the Indian EV sector and the already accumulated losses of troubled E2W OEMs, nearly matching this monumental figure.
In a letter to Honorable Minister of Heavy Industries, Mahendra Nath Pandey, SMEV underscored that OEMs are reaching a breaking point owing to daily mounting losses and, this delay is practically finishing them as this punishment has continued for over 22 months, which itself is a crime.
Sanjay Kaul expressed, "I propose that these companies having suffered enough and having paid any penalties due many times over in sheer losses, may kindly be absolved and permitted to continue to do business."
The letter to the MHI Minister highlights the irony that the affected companies were once pioneering startups and unicorns in an embryonic EV landscape. As pure-play EV manufacturers, they lack supplementary businesses present in traditional industry players and SMEV has appealed to prevent "Start-Up India" from transforming into "Wind Up India."
Proposing a potential solution, SMEV advocates the establishment of a Sinking Fund by the Ministry to provide critical assistance to OEMs on the precipice of closure. This fund could offer soft loans, grants, or similar mechanisms to resuscitate these entities, aligning with MHI's responsibility to nurture the EV ecosystem through financial initiatives.
