Electric two-wheeler firms brace for subsidy exit, war-hit to costs

New Delhi: India’s top two-wheeler makers are bracing for pressure on margins and demand, as a surge in commodity costs linked to the ongoing West Asia war coincides with the impending withdrawal of electric vehicle (EV) subsidies. The twin blow has led to concerns that the companies, including TVS Motor, Bajaj Auto and Hero MotoCorp, may be forced to raise prices, absorb cost pressures, or risk slowing adoption of EVs.
Analysts and industry executives note that the removal of subsidies under the government's PM E-Drive scheme from April can lead to price hikes of up to ₹5,000 for electric two wheelers.

The companies have been requesting for the scheme's extension.This comes at a time when the manufacturers were already reeling under pressure from higher commodity prices, with analysts noting that US-Israel's war with Iran has only worsened the situation.Two-wheeler majors had earlier said commodity cost inflation has been on the rise since October, but a robust volume growth in the December quarter had averted a big hit. Trading Economics data showed that prices of key input such as aluminum and platinum group metals (PGM) have surged 14-19% since October.
At least two analysts noted there will be at least a 300-basis-point impact on the companies' margins that they can either choose to pass on to customers or absorb, which can impact their profitability.

India's automobile sector, especially two-wheelers, is seen very sensitive to price hikes.“Ongoing geopolitical tensions may drive temporary commodity cost volatility (~300-400bps impact), with OEMs either raising prices or absorbing the impact (depending on the longevity of the impact),” analysts at Emkay Global wrote in a 16 March note. “The E-2W industry could see a