"A model of that kind is not necessarily productive," he said.
Certain speed vehicles with city speed of 30-35 kmph range and running up to 30-40 km a day and not beyond, don't require very large batteries, he added.
"So, in this case, it is actually negative for them because the subsidy (they) are getting right now will be reduced by half (under FAME II)," Munjal said.
The Union Cabinet last week approved the FAME II scheme to implemented in three years with effect from April 1, 2019.
Under the scheme, subsidies will be given to three-wheelers and four-wheelers used for public transport or registered for commercial purposes. In the two-wheeler segment, the focus will be on private vehicles.
Through the scheme, the government had planned to support 10 lakh electric two-wheelers, five lakh three-wheelers, 55,000 four-wheelers and 7,000 buses.
Munjal said overall, the announcement of the scheme is a welcome development as the industry has been demanding this and policy clarity for a long time.
However, he said, "How is that (subsidy) calculated needs some refinement. It should not be based on just one matrix. It should be based on power, performance and range," he said.
Munjal further said even high-speed electric two-wheelers doing about 70-90 kmph and running for long distances will also be expensive, which will be not less than Rs 1 lakh and a half despite subsidising it more.
"The issue is the capacity and size. The more you are adding on, the less efficient the vehicle is becoming," he said.
These products will be more expensive than the normal internal combustion engine vehicles.
"At that price point is the shift going to happen as quickly as the government is talking about?," he asked, adding it would raise questions as to whether consumer would accept the high price points.
"As it is, the markets have not started absorbing these products (electric vehicles) completely," Munjal said.
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.