Toyota Kirloskar Motor (TKM) believes that hybrid electric vehicles (HEVs) are the right ‘vehicle’ for India until the time a nationwide charging infrastructure is set up for battery electric vehicles (BEVs). While BEVs have a battery that needs to be charged from an external source, HEVs typically use two sources of power to drive the vehicle – an internal combustion engine (usually petrol) and an electric motor.
Even the best BEVs available in India right now have a range of 300-500 km, and if there isn’t ample public charging infrastructure support, users of BEVs can face range anxiety (worry that the battery will run out of power and they will be stranded on the road).
HEVs don’t have any such issues – on short distances, certain HEVs (especially plug-in HEVs) can be operated only as BEVs, and longer journeys can be enabled using petrol power.
According to a study by the iCAT (International Centre for Automotive Technology), a government testing agency, HEVs can run 40% of the distance and 60% of the time as an electric vehicle with the petrol engine shut off, and this gives HEVs better fuel-efficiency improvements (35-50%) and lower carbon emissions as compared to petrol vehicles. This practicality of HEVs is what TKM wants the policymakers to realise so that HEVs can be treated on the middle ground as far as taxation structure is concerned.
HEVs, BEVs and GST
The current GST on BEVs is 5% across the board. For petrol/diesel vehicles, the effective tax rate (including compensation cess) is 28% for small vehicles and 45% for large ones, and the same is for HEVs. “What this means is that even though HEVs fall somewhere between BEVs and conventional fuel vehicles – and can act as the bridge towards electrification of mobility—these don’t get any tax advantage,” Vikram Gulati, country head & senior vice-president, TKM, told FE.
According to Gulati, for HEVs to get popular, these need to be made more affordable. “Two things can be done in this regard. One, the ideal GST structure for HEVs should be 11-13% lower effective tax than petrol/diesel vehicles. Two, once that is done, it should be left to OEMs to bring down the cost of HEVs,” he said.
On how TKM arrived at this figure of 11-13%, Gulati added that “while requesting for GST reduction, we are also cognisant of the fact that revenue is an important element, and so we should be responsible in asking for a reasonable and justifiable number, and as per our calculations anything between 11% and 13% differential (as compared to tax on petrol/diesel vehicles) creates parity in terms of both taxation and the associated benefits that HEVs can bring.”
According to auto analysts FE talked to, these benefits include lower carbon emissions vis-à-vis petrol/diesel vehicles and marginally lower fuel import bills of the country (because HEVs are more fuel-efficient than petrol/diesel vehicles). “We are not talking only about hybrid technology here,” Gulati added. “What we want the government to do is give proportionate support to all automotive technologies, i.e. having a technology-agnostic approach to mobility – such an approach ticks all the right boxes.”
Coal is powering the battery
A major reason India should proactively look at HEVs is the current energy mix. According to the ‘India Energy Outlook 2021’ analysis by the IEA (International Energy Agency), 70% of electricity generation in India happens by burning coal. The report noted that even though solar power is set for explosive growth in India, it will take about two decades for solar to match coal’s share in the Indian power generation mix, by which time the share of both would be a little over 30% each.
According to the 2021 Nomura report ‘Holistic Assessment of Alternate Powertrains for Passenger Vehicles in India’, HEVs have the lowest lifetime well-to-wheel carbon dioxide emissions (around 30% lesser emissions) as compared to BEVs, whose batteries get charged predominantly by burning coal (in the current Indian energy mix scenario).
User’s point of view
According to Rajeev Singh, partner & automotive leader, Deloitte India, the major bottlenecks to BEV demand are range anxiety (primarily owing to longer charging cycles and lack of frequently available charging stations) and high upfront price (primarily due to high battery cost). “Despite significant advances in battery technology as well as in policy push towards charging infrastructure, these bottlenecks still directly impact the customer,” Singh shared with FE in an article he wrote on June 21, 2021 (https://bit.ly/3l4YrSj). “HEVs could be an interim option where customers get the best of both worlds (petrol and electric), get more accustomed to the BEV ecosystem, and build enough confidence to dive into all-electric mobility.”
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