An official confirmed that Hyundai India will cut the prices immediately on Kona, adding that the company is yet to arrive at price point.
Electric vehicle players such as Hyundai Motor India, Ather Energy have decided in favour of price cuts following GST rate cut from 12% to 5%. Welcoming the GST Council’s decision to bring down the rate to 5% with effect from August 1, Hyundai Motor India,the first mover in the four-wheeler EV space, has decided to cut the prices of its just-launched Kona Electric proportionately to the rate cut to the effect of anywhere between Rs 1.3 lakh and Rs 1.5 lakh. Similarly, Hero MotorCorp-backed Ather Energy, a EV two-wheeler player, will effect a price cut of around Rs 10,000 on its products.
An official confirmed that Hyundai India will cut the prices immediately on Kona, adding that the company is yet to arrive at price point. However, the official said it could be in the range of around Rs 1.5 lakh on Kona. SS Kim, managing director and CEO of Hyundai Motor India, said: “We welcome the GST council’s historic decision to reduce the GST on EV from 12% to 5% and on EV chargers from 18% to 5%. The tax benefit will help create an ecosystem that will encourage faster mass adoption of EVs in our society. With the launch of India’s first fully electric SUV — Kona Electric— Hyundai has already strengthened its commitment to bring ‘clean mobility’ solutions to the Indian customers and we are thankful to the government of India for fulfilling its promise as this strategic decision by the GST council will further strengthen confidence of prospective buyers for electric mobility in future.”
Tarun Mehta, CEO and co-founder of Ather Energy, said: “The Union Budget gave a much-needed push to the EV industry and the outcome of the GST Council meeting is even more welcoming. The reduction of GST rates from 12% to 5% reduces the upfront cost of buying a vehicle by Rs 8000-Rs 10,000. Compounded by the tax rebates offered in the Budget, today EVs are an affordable upgrade from existing ICE options.”
“Along with vehicles and chargers, a GST reduction on using public charging network should have also been considered. Though today we offer free charging for all electric two-wheelers and four-wheelers, consumers will have to begin paying 18% GST in the coming months. Offering preferential electricity rates along with a lowered GST rate will make owning EVs more affordable and will increase adoption,”
“As a manufacturer, we would like the Union government to review the current taxation framework applicable on raw materials and the final products. There is an inherent inverted-duty structure as the GST input on raw material and other overheads are on average of 18 % wherein the output is now going to be pegged at 5%. This structure results in significant working capital blockage,” Mehta said.
Even with the existing GST inverted-duty refund framework in place, there is working capital blockage on the overheads and capital investments. A comprehensive GST refund structure of electric vehicle manufacturers or a reduced GST liability on raw materials should be assessed for seamless cash flows in the long run, he added.
Sohinder Gill, director general of Society of Manufacturers of Electric Vehicles ( SMEV), said: “The government is lately showing its clear intentions of promoting EVs and GST reduction is one such measure in line with the series of actions taken by the it in the past few months. We welcome the 7% reduction as it will reduce the gap between the EVs and the IC Engine vehicles.”
If Fame II was a dampener, the GST reduction is certainly a bright spot in the national EV policy. The EV industry now awaits the corresponding reduction of the 18% in the spare batteries as it will help maintain the low running cost of EVs over their lifetime, Gill added.