The world’s No 2 carmaker Volkswagen has chosen battery electric vehicles over hybrids for India owing to lack of tax breaks on the latter making them economically unfavourable.

The German carmaker had explored bringing hybrids to India which are widely considered to be the bridge between internal combustion engine vehicles (petrol, diesel, CNG-powered vehicles) and pure battery electric vehicles. Plug-in hybrids were the one variant which the company had considered for India.    

Plug-in hybrid

A vehicle using hybrid technology employs two sources of energy for mobility. While one source is the traditional petrol/diesel engine, the other source is a battery pack. The battery pack is usually used for smaller distance commute (under 80 kms) while the petrol motor is used for travelling longer distances.

Speaking to BusinessLine, Klaus Zellmer, Board Member for Sales, Marketing and After sales at Volkswagen Passenger Cars, said, “Plug-in hybrid would make perfect sense if the commute is short where the electric motor can be used. But when the motor is not used it’s just a petrol-powered car. We need to stay focused on battery electric because it is a safe bet. Battery electric vehicles is probably the best focus we can have (for India). Plug-in hybrids are expensive technology and heavy.”

A plug-in hybrid, as the name suggests, needs external charging of its batteries like any normal electric vehicle unlike the full hybrid which charges on its own when the petrol/diesel engine is used.

Higher taxes

While electric vehicles carry a Goods and Service Tax (GST) of 5 per cent and zero cess, hybrid vehicles are slapped with a GST of 28 per cent with a further 15 per cent cess (except small hybrids), taking the total to 43 per cent. This taxation puts hybrids in the same bracket as petrol and diesel cars. Many States have even waived off the road tax registration on electric vehicles.

Because of the expensive price tag, only luxury car models are available with hybrid options in India. Toyota Kirloskar, Lexus, Volvo and BMW have full hybrid cars on sale in India. According to electric vehicle market leader, Tata Motors, hybrid vehicle technology won’t be able to sustain itself beyond the next few years and their usage is purely to achieve the CAFÉ norms.

Phase 2 of the CAFÉ norms, which will come into force on April 1, 2024, will require vehicular emission to go down further to less than 113gm/km from the current 130gm/km. Such norms are already in practice in developed automotive markets.  

Volkswagen is developing an electric car on the lines of the concept car ID Life which was showcased recently. While this car is aimed for global markets, it could make its way to India if response from the market is positive coupled with a favourable cost structure.