Centre must encourage both hybrids and EVs, says Maruti Suzuki India

India must encourage both hybrid cars and electric vehicles (EVs) as they are not in competition with each other when it comes to the country's aim of achieving carbon neutrality by 2070, Rahul Bharti, executive officer, corporate affairs, Maruti Suzuki India, stated on Saturday.

As India aims for carbon neutrality by 2070, automakers are divided over the best pathway. Japanese giants like Maruti Suzuki and Toyota are pushing hard for tax cuts on hybrids, arguing EVs alone cannot carry the emissions reduction load. But carmakers like Tata Motors and Kia are opposing any such tax cuts, insisting only a full-throttle EV blitz can truly decarbonise India's roads. The central government is considering the Japanese companies' proposal.

"On the matter of taxation, it is best thought of by the government, but what I can submit is that we are seeing some wrong comparisons going on in the market," Bharti stated at a press conference on Saturday.

He said the "debate" is not between EVs and strong hybrids as both are excellent technologies for carbon dioxide emissions reduction. "Both need to be encouraged. The debate is between strong hybrids and IC (internal combustion) engine cars. I cannot imagine a situation, and nobody can justify why an IC engine car should be preferred over a strong hybrid car," he added.

During the second half of FY24, the sales of hybrid cars at 52,500 units were higher than electric cars at 48,000 units in India. Hybrid cars in India currently bear a substantial Goods and Services Tax (GST) rate of 28 per cent, which can escalate to over 43 per cent after factoring in additional cess, varying across models. In contrast, electric cars face a much lower tax imposition, with a GST rate of merely 5 per cent.

Bharti said, "So, what we are saying is that we should try to maximise EVs, and that still leaves a lot of room for IC engine cars because EVs will not reach a penetration of 100 per cent or 80 per cent in the next 10 to 15 years. For balance IC engine vehicles, can we do something to improve CO2 (carbon dioxide) or improve energy efficiency? Let us say for the next 10 years. Can hybrids help there? That is the question," he added.

Electric cars accounted for only about 2.3 per cent of total car sales in India in FY24. In China, their share stands at about 25 per cent. The Indian government is targeting that by 2030, about 30 per cent of the cars sold in India would be electric. However, Indian carmakers believe this target is too ambitious and realistically, the share would reach anywhere between 15 to 20 per cent.

Bharti stated that in a strong hybrid EV, it is the computer that optimises both the drive trains, the IC engine and the battery motor combination, and there is no option given to the driver to run in pure IC engine mode. "Our Grand Vitara (a hybrid car) gives a 26 per cent reduction in CO2 and 36 per cent increase in fuel efficiency as compared with IC engines. Similarly, Invicto (a hybrid car) gives a 44 per cent jump in energy efficiency and 30 per cent reduction in CO2 emissions," he stated.

He mentioned that the strong hybrids are a very powerful way to cut oil imports, generate energy efficiency, and reduce carbon dioxide emissions immediately without the pressure of range anxiety or lack of charging infrastructure.

On May 26, Hardeep Singh Brar, senior vice president and national head of sales and marketing at Kia India, had told Business Standard that India, its centre as well as states, should "stay focused" on the promotion of EVs since the nascent EV market's growth rate is currently "not great" and requires support through low taxes for the next five to seven years.

When asked if the government should be lowering taxes on hybrid cars, Brar replied, "No. I don't think we need that because as per the government policy, there has been a huge focus on EVs. So, I think all the OEMs (original equipment manufacturers) have invested heavily in EVs. So, if we try to bring in hybrids at this point of time, I think it will derail all the investments and all the focus going on EVs, which is why I think that we should not get into changing any kind of policies so far as hybrids are concerned. We should stay focused on EVs."

During the last several months, certain state governments like Telangana and Karnataka have decided to reintroduce road taxes on EVs, adding another layer of complexity to the debate.