The scheme was focused on Zero Emission Vehicles (ZEVs) i.e. Battery Electric Vehicles and Hydrogen Fuel Cell Vehicles. The incentives under the scheme were initially applicable from 2022-23 to FY 2026-27 (5 years) and the disbursement of incentives was to begin 2023-24 and continue till 2027-28. But the PLI scheme was later tweaked, so that disbursement of incentives is now scheduled to begin in the current fiscal year, 2024-25.
But three years after launch and some amendments later, the PLI scheme for automobile OEMs has been a middling success at best. Only a handful of large OEMs have had their products certified to be eligible for incentives. Till date, not one rupee of the incentives under the scheme has been disbursed and many of the successful contenders appear to be struggling to meet the stringent criteria for availing benefits.
Ola succeeds:
Ola Electric has received certification for its mass-market scooters S1 X 3 kWh and S1 X 4 kWh and a statement from the company said that both these models have “successfully met the stringent minimum localisation criteria of 50%, as mandated by the Ministry of Heavy Industries. With this, Ola Electric has become the only two wheeler and pure-play EV manufacturer to receive the certification for compliance with the eligibility assessment requirements (PLI certificate) for four products - S1 Air, S1 Pro, S1 X (3 kWh, and 4 kWh). The company had earlier received the certificate for S1 Air at the Auto PLI Conclave organised in January 2024.”
The successful registration for S1 X 3kWh and S1 X 4 kWh is significant because these two models contribute almost half of Ola Electric’s total revenue and with incentives scheduled to flow in under the PLI scheme, the company will be able to improve its bottomline. “Receiving the PLI certification for the premium and mass-market products affirms our vertically integrated manufacturing strength marking a significant achievement in advancing India's EV vision,” a company spokesperson said.
Under the PLI scheme, Ola Electric is eligible for incentives for up to five consecutive financial years, starting this fiscal. The incentives would range between 13% and 18% of the “determined sales value” (DSV) of the products.
What about other successful applicants?
When the Ministry of Heavy Industries announced the list of successful automobile OEM applicants under the PLI scheme in February 2022, it had listed out 20 such companies under three separate categories: Champion OEMs (except 2w and 3w), Champion OEMs (2w and 3w) and New Non-Automotive Investor OEM. Ola was listed in the third category of new non-automotive investors, along with five other applicants. A senior official at one of these successful applicants told ETAuto that only Ola has so far succeeded in getting the certification and while one or two of the other five OEMs may be selling some products commercially, none has been able to fulfill the various criteria for becoming eligible for PLI support.
The eligibility criteria include investment quantum, global sales value, localisation levels etc.
This person said that for some OEMs, making large investments needed to qualify for the PLI scheme would be counter productive at this stage, since the market for electric vehicles is not mature enough. “Take the case of an electric two wheeler OEM. Why would it want to invest, say, INR 2000 crore cumulatively when all that is needed for installing an annual capacity of a million units would be at best INR 500 crore? Unless an OEM can do full backward integration - make battery packs, cells, motor, chassis - all by itself to justify the large quantum of investment, it will not become eligible for PLI benefits,” he said, requesting anonymity. This is what Ola has been able to achieve, though, through large investments and back end integration.
Besides Ola, the other successful applicants under the PLI scheme were: Axis Clean Mobility, Booma Innovative Transport Solutions, Elest, HOP Electric Manufacturing and Powerhaul Vehicle. Even outside the “new non-automotive investor” category, only some large established OEMs have so far qualified for PLI Incentives. These include Tata Motors (for Tigor and Tiago EVs besides LCVs and buses), TVS Motor Company (for its iQube electric scooter variants), Mahindra & Mahindra (for electric three wheelers) and Bajaj Auto (for electric two and three wheelers). Some of the other qualified OEMs under the auto PLI scheme were Maruti Suzuki India’s parent Suzuki Motor Company, Hyundai India, Kia Motors and Ashok Leyland.
No disbursements under Auto PLI so far:
In any case, disbursement of incentives under the scheme are yet to begin even for those OEMs which have qualified and had some of their products certified. MoS for Heavy Industries B Srinivasa Varma said in a written reply in the Lok Sabha earlier this month that applicants were in the process of making investments and achieving Domestic Value Addition (DVA) of minimum 50% under the Auto-PLI scheme and that no claims had been received by the government till now. The first year for incentive disbursement is the current fiscal.
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