With the government's financial assistance to electric vehicles ending on March 31 this year, the segment has seen sales dropping by over 75 per cent, leading to 275 dealers closing shops in the last 2-3 months.
"We had kept on passing the incentives to consumers till the last date of the scheme. As on March 31, 2012, an outstanding amount of Rs 32 crore is to be received from the Ministry of New and Renewable Energy (MNRE)," Society of Manufacturers of Electric Vehicles (SMEV) Director Sohinder Gill told PTI.
As per the scheme started by the MNRE in December 2010, the government was to provide financial incentive for each electric vehicle sold in India during the remaining part of the 11th Plan, which were 2010-11 and 2011-12.
Besides, the introduction of the National Electric Vehicle Policy, which is being drafted by the Ministry of
Heavy Industries and Public Enterprises, has also led to stopping of the MNRE scheme as two government incentive programmes on the same sector cannot continue simultaneously.
According to Gill, though "MNRE wanted to help" it could not as funds from the Finance Ministry never came to the MNRE.
Talking about sales, he said: "Since April, two-wheeler sales have dropped by over 75 per cent to about 3,000 units a month from about 7,000 units earlier, while Mahindra Reva has not sold a single electric car so far in this fiscal."
The prices have now gone up to about Rs 26,000-40,000 for two-wheelers from Rs 19,000-29,000 due to the end of the scheme and rupee fall. The car prices rose by Rs 1 lakh to about Rs 4.5 lakh, he added.
Gill further said with sales gradually drying up, 275 dealers have closed their dealerships across the country.
"SMEV members have dozens of more closure applications. If the situation does not improve, I think another 200 outlets will shut down in the next 2-3 months," he said, adding about 1,000 electric vehicle dealers exist across the country.
When asked about the possible solution to this phase, Gill said the manufacturers need incentives only for the "time being" till the National EV Policy comes into effect.
"We only need Rs 60 crore for the entire year. We have been knocking the doors of Finance Ministry every week, but without any positive response yet," he added.
In December 2010, MNRE announced a Rs 95 crore incentive package for the remaining part of the 11th Plan. The scheme envisaged incentives of up to 20 per cent on the ex-factory prices of the vehicles, subject to a maximum limit.
The cap on the incentive was Rs 4,000 for low speed two-wheelers, Rs 5,000 for high speed two-wheelers, Rs 60,000 for seven seater three-wheeler and Rs one lakh for a car.
Some of the leading electric two-wheeler manufacturers include Hero Electric, Avon Cycles, BSA Motors and Lohia Auto.
In the three-wheeler space, Lohia Auto and Mahindra & Mahindra are present. The four-wheeler market is minuscule with only one player Mahindra Reva.