Tata Motors pushes for subsidy for electric taxis after being excluded from PM E-Drive scheme

The PM Electric Driving Revolution in Innovative Vehicle Improvement (PM E-DRIVE), which marks the third phase of the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) policy, leaves the electric taxi segment out of the scope of subsidies, even though it is a key form of shared mobility.

The carmaker is lobbying the government to take into account the taxi segment’s high CO2 emissions due to high daily mileage. And to reduce the environmental impact of the transport sector, it is essential to replace taxi fleets with electric vehicles.

Impact on sales

Sales to fleet customers such as Uber and BluSmart account for 20% of Tata Motors’ total EV volume, Tata Motors Group CFO PB Balaji said at the company’s first-quarter earnings call on July 31, adding that the absence of FAME II incentives in the June quarter and July had impacted 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 decline widened to 21% year-on-year.

Additionally, conventional passenger vehicles also saw a 6% YoY decline in sales in Q1 2024-25, even as the company reported impressive revenue and profit growth driven by sales of its luxury car division, Jaguar Land Rover.

MintEmailed queries to Tata Motors remained unanswered till the time of going to press.

Since 2015, more than 1.6 million electric vehicles have been subsidized in the first two phases of FAME, including only 23,311 four-wheel electric vehicles in the second phase.

Additionally, several state governments have cut subsidies for electric vehicles.

A necessary boost

“Subsidies for electric passenger vehicles on the commercial side would have definitely helped,” said Hemal Thakkar, senior practice leader and director at Crisil. “However, even without central and state subsidies (assuming ₹1.5 lakh FAME grant and ₹“(Rs 1.5 lakh subsidy from the Delhi government), the lifetime cost of an electric vehicle in New Delhi is still 17% and 12% lower than petrol and diesel vehicles, respectively, over a four-year ownership period.”

The cost advantage, even without subsidies, remains significant for fleet operators, Thakkar said.

While the electric taxi segment remains a focus, Crisil also sees growth potential in the corporate employee transportation market. “With environmental, social and governance (ESG) compliance becoming mandatory for many companies, especially as part of Scope 3 emissions reporting, the demand for electric vehicles in employee transportation could increase significantly. This presents a promising opportunity for automakers to provide electric vehicle solutions to companies looking to reduce their carbon footprint,” Thakkar said.

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