Rocked by the dramatic reduction in subsidies under the FAME-II scheme, electric two-wheeler start-up Matter had announced a Rs 30,000 price hike for its maiden e-motorcycle, the Aera, towards the end of May. At the time, the Gujarat-based firm said it would sell the Aera at its launch price to all customers who booked the bike till June 5. However, this date was then quietly extended to June 11. The start-up says it has received 40,000 bookings for the Aera, and confirmed to carandbike it will honour its launch price for all 40,000 customers.
Also Read: Matter Aera Electric Motorcycle Launched In India; Prices Start At Rs. 1.44 Lakh
The Aera is the first electric motorcycle in India to feature a manual transmission.
The Aera was introduced at a launch price of Rs 1.44 lakh for the 5000 variant, and Rs 1.54 lakh for the 5000+ variant (ex-showroom). This price originally accounted for the full Rs 60,000 incentive that the Aera accounted for at the time, thanks to its large 5 kWh battery pack. However, the government has since revised the FAME-II subsidy structure for electric two-wheelers, limiting the total incentive to 15 per cent of a vehicle’s ex-factory price (which cannot exceed Rs 1.50 lakh), and capping the incentive at Rs 10,000 per kWh of battery capacity. As a result, most electric two-wheelers with a large battery can now only qualify for a subsidy of around Rs 22,500.
Also Read: FAME-II Subsidy For Electric Two-Wheelers Slashed; EV Players React
Matter – which is yet to sell a single motorcycle – had no choice but to pass on most of the subsidy reduction to customers in the form of a price hike, which left the Aera with a price tag of Rs 1.74 lakh (5000) and Rs 1.84 lakh (5000+, ex-showroom). However, having only opened order books on May 17, Matter had barely any time to garner bookings before the FAME-II subsidy revision came into effect from June 1.
Also Read: Matter Aera Electric Motorcycle Prices Hiked By Rs 30,000 As FAME-II Subsidy Drops
The 5 kWh battery meant the Aera could previously qualify for a total FAME-II subsidy of Rs 60,000.
In a bid to avoid spooking customers with a significantly higher price tag within a month of order books opening, Matter has chosen to absorb the burden of the subsidy reduction (amounting to over Rs 37,000 per motorcycle sold) for its first 40,000 bookings. A back-of-the-envelope calculation suggests Matter will have to absorb an additional burden to the tune of Rs 150 crore by choosing to sell 40,000 bikes at its original launch price, effectively subsidising customers to a great extent, on its own.
Also Read: Tork Kratos R Electric Motorcycle Price Hiked; Now Costs Rs 1.87 Lakh
“Matter realises that it has to acquire a substantial customer base at all costs, which is crucial to its success, considering it is a completely unknown entity just about to enter the market with its maiden product. Bearing in mind the impact a massive price hike could have on potential buyer sentiment, and not wanting to risk losing customers at a time when it is only just stepping into the market, the start-up is likely to view the extension of the introductory price as a sort of customer acquisition cost”, an industry analyst told carandbike, requesting anonymity.
Deliveries of the Aera are set to begin in September 2023.
The Aera — designed and developed completely in-house by Matter — is a unique proposition, since it is the only electric motorcycle in the country with a four-speed sequential manual transmission.
Matter has also confirmed to carandbike that it is ‘aiming’ to fulfil most of the 40,000 orders it has received so far by March 2024. The start-up has previously said it will begin deliveries of the Aera in September, and that the bike will be manufactured at its Ahmedabad plant, which has an annual production capacity of 60,000 units.
One of Matter’s key rivals, Tork Motors, too announced a price hike for its electric motorcycle, the Kratos R, which is now priced at Rs 1.87 lakh (ex-showroom, including FAME-II subsidy).
