EV sales could see slowdown if taxes on hybrids reduced: Report
The Minister of Road, Transport & Highways, Nitin Gadkari, recently proposed a tax reduction for hybrid vehicles to 12 percent from the existing 28 percent for sub-4-metre and 43 percent above-4-metre hybrid vehicles, respectively. If the proposed policy is implemented, the ex-showroom prices of the hybrids are likely to come down by 21 percent and TCO will become favourable for hybrids as compared to pure EVs. A recent report by Kotak Institutional Equities states that this incrementally could see OEMs (especially Japanese) accelerate product introductions with strong hybrid technologies, which may hamper EV adoption in the near term.
The Minister highlighted that the proposal would aim to stimulate the adoption of hybrid and electric vehicles in the country, aligning with the government’s broader objectives of promoting sustainable mobility and reducing pollution levels. He also emphasised the need for discussions on this matter at the upcoming GST Council meeting, underscoring the potential industry benefits, decreased imports and environmental gains.
At present, there are five hybrid passenger vehicles available in the country, which include Maruti Suzuki Grand Vitara & Invicto, Toyota Urban Cruiser Hyryder & Innova Hycross and Honda City. For instance, the price of Maruti Suzuki Grand Vitara Alpha (AT), which is currently sold at an ex-showroom price of Rs 17 lakh is likely to come down to Rs 13 lakh. Also, ex-showroom price of Maruti Suzuki Invicto will come down to Rs 20 lakh from Rs 25 lakh.
