India has witnessed an impressive surge in the popularity and adoption of hybrid vehicles. These vehicles combine the benefits of traditional internal combustion engines as well as electric power offering improved fuel efficiency, reduced pollution, and an overall greener alternative.
With government incentives, technological advancements, and growing awareness about the importance of sustainable transportation, is India moving towards a hybrid future?
The automobile sector plays a significant role in India’s economy, contributing 49% to the total manufacturing GDP and 7.1% to India’s total GDP. Over the past few years, the industry has been preparing for a major transformation to the EV era as it seeks to bring down its carbon footprint.
In line with its commitment under the Paris Agreement, India aims to reduce the emission intensity of its gross domestic product by 33%-35% by 2030, emphasizing the importance of sustainable practices in the automotive industry. The government has set a target of achieving 30% share of electric vehicles on Indian roads by 2030. The EV market is expected to expand at a CAGR of 49% during 2021-2030, with annual sales volume expected to cross 17 million units by 2030. However, the market is relatively nascent, with electric four-wheeler sales at 53,843 units in 2023 (YoY growth of 154%).
In this period, consumers seem to be gravitating towards a third option – hybrids. The country has observed an impressive demand for strong hybrid vehicles, leading to waiting periods for multi-purpose vehicles (MPV) Toyota Hycross, Hybrid sedan Honda City and the Suzuki Grand Vitara extended up to two years. For the uninitiated, strong hybrid vehicles consist of a combustion engine and an electric motor that can operate together as well as independent of each other. The electric motor is useful in times where you are fine with low speed, like city driving. But when the driver demands more pace, the internal combustion engine kicks in.
With the introduction of a new range of strong-hybrid technology-based vehicles from players like Toyota and Maruti, strong-hybrid EV (HEV) sales overtook battery EV (BEV) sales in two consecutive quarters. The combined sales of HEV and BEV reached 4.3% of the total Indian passenger vehicle market in Q1 2023, with each contributing 2.2% and 2.1% share.
As per the data shared by Autopunditz, strong hybrid vehicle sales reached 22,389 units in Q1, 2023, whereas BEV sales touched 21,109 units in the same period credited to the launch of new vehicles from Tata, Mahindra, Citroen and BYD.
Schemes that support the transition
The government’s schemes launched for the EV industry offer the same benefits to hybrid vehicles, and have therefore been pivotal to their growth. These include:
For a long time, petrol vehicles have maintained a strong presence on Indian roads. However, the emergence of Electric Vehicles (EVs) with their promise of environment-friendly mobility that is easier on the pocket has definitely sparked interest. Nonetheless, transitioning from petrol vehicles to EVs can pose challenges due to their higher cost and the lack of adequate infrastructure. Here are a few key factors contributing to the growing popularity of hybrid vehicles in the country:
Over the next few years, the two segments are expected to grow in tandem. An ICRA report projects that CNG, EV and hybrid vehicles will be able to capture 20-30% share of the Indian automotive market by 2030. However, hybrid cars still do not get incentives like EVs and are subject to high GST rate of 29% in tandem with petrol and diesel cars. It is something that the government is discussing internally on the demand of the industry. Given how they have performed despite high taxation, a reduction in GST could actually provide a very strong push to hybrid vehicles in the coming years.