The development comes amid home grown auto majors Tata Motors and Mahindra & Mahindra (M&M), Hyundai Motor India and Kia India writing to the state government saying that any benefit extended on sales of hybrid vehicles will impact adversely demand for full electric ones and “derail” efforts towards electrifying the transport sector.
Maruti Suzuki, Toyota Kirloskar Motor. Honda Cars India, Tata Motors, Mahindra & Mahindra, Hyundai Motor India, Kia India and Bajaj Auto are among the carmakers who attended the meeting chaired by Chief Secretary, Uttar Pradesh Government held in Lucknow Sunday.
Sources aware of the development told ET, both groups manufacturing electric and strong hybrid vehicles made presentations at the meeting, citing advantages and drawbacks of each technology. “The state government concluded that given that penetration of both electric and strong hybrid vehicles is negligible at about 1.5%, it will continue to offer incentives on these vehicles for now”, a senior industry executive said, adding, “The state government is of the view that it will incentivise customers to move away from conventional petrol and diesel vehicles.”
A second executive in the know said, “The state government said that it (the EV policy) is not a permanent one, it is dynamic. Right now, sales of both hybrid and electric vehicles are low. The transport commissioner was also present at the meeting, along with representatives from RTOs. They will examine the market situation in detail and if some changes are needed, they are open to making them.”
The Uttar Pradesh Industries Department had announced July 5 it will waive registration charges on hybrid and plug-in hybrid vehicles, with effect from July 1. Currently, electric vehicles (EVs) in India are taxed at 5%, whereas hybrids are taxed as high as 43%, just below the 48% tax imposed on petrol-driven cars. Toyota, Maruti Suzuki and Honda sell hybrids in India, which currently doesn’t have any plug-in hybrids. The benefits are valid for about a year till Oct 2025.
The incentives have created a divide among automakers in the local market. While EV makers like Tata Motors and Mahindra & Mahindra have said that government should invest resources to move to zero emission vehicles, hybrid makers such as Toyota, Maruti Suzuki and Honda contend that a multi-technology approach, which includes encouraging adoption of ethanol, flex-fuel, biogas, hybrid and battery electric vehicles is better suited to reduce emissions in a diverse country like India.
“Electric vehicle makers are making massive investments in the technology. They fear that any incentive given to hybrids will slow down the transition to all electric, especially at a time when sales of electric cars are under pressure due to high costs and lack of charging facilities”, an executive at an EV maker told ET in a recent interaction.
Uttar Pradesh is the second largest car market after Maharashtra and accounts for 11% of total sales. For cars priced above INR 10 lakh, Uttar Pradesh levies a registration charge equivalent to 10% of the ex-showroom price. The waiver that was announced July 5 was estimated to result in an effective price reduction of INR 1.5 lakh to INR 3 lakh depending on the model and variant, reducing the price gap between comparable petrol models and hybrids, making the latter more attractive.
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