Tata Motors pushes for subsidies for electric taxis after being excluded from PM’s E-Drive

The PM E-DRIVE marks the third phase of the FAME (Fastening the Adoption and Manufacturing of Hybrid and Electric Vehicles) policy, which excludes electric taxis from subsidies despite them being an important form of shared mobility.

The automaker is lobbying the government to consider the high CO2 emissions generated by the taxi industry due to the high daily mileage. Replacing the taxi fleet with electric vehicles is crucial in order to reduce the environmental impact of the transport sector.

Impact on sales

Sales to fleet customers such as Uber and BluSmart account for 20% of Tata Motors’ total electric vehicle sales, Tata Motors Group Chief Financial Officer PB Balaji said at the first quarter earnings conference on July 31, adding that the absence of FAME II incentives in the June quarter and July did impact the company’s fleet sales.

Tata Motors’ electric vehicle sales fell 14% year-on-year to 16,579 units in the quarter ended June 30. In July, the year-on-year decline widened to 21%.

Moreover, even as the company announced impressive revenue and profit growth led by its luxury car division Jaguar Land Rover, sales of conventional passenger vehicles also fell by 6% year-on-year in the first quarter of 2024-25.

MintAn email query sent to Tata Motors remained unanswered till press time.

Since 2015, more than 1.6 million electric vehicles were subsidized in the first two phases of FAME, of which only 23,311 electric four-wheelers were subsidized in the second phase.

In addition, some state governments have already scrapped subsidies for electric vehicles.

Necessary push

“Subsidies for commercial electric passenger vehicles will certainly help,” said Hemal Thakkar, senior business head and director at Crisil. “However, even without central and state subsidies (assuming ₹150,000 FAME subsidy and ₹Despite a Delhi government subsidy of Rs 1.5 lakh, the lifetime cost of an electric car in Delhi is 17% and 12% lower than petrol and diesel cars, respectively, over a four-year ownership period.

Thakkar said that even without subsidies, the cost advantage would still be significant for fleet operators.

While the electric taxi segment remains the focus, Crisil also sees potential growth in the corporate employee transportation market. “With environmental, social and governance (ESG) compliance becoming mandatory for many companies, especially under scope 3 emissions reporting, the demand for electric vehicles for employee transportation is likely to rise sharply. This presents a promising opportunity for automakers to offer electric vehicle solutions to corporates looking to reduce their carbon footprint,” said Thakkar.

Scope 1, 2 and 3 emissions are greenhouse gases released throughout an organization’s value chain.