Amid growing buzz to incentivise hybrid vehicle technology, Tata Motors Group CFO P B Balaji has said, “hybrid is a transient technology” and EV is the “destination technology” that needs “viability funding”, the Government of India has rightly chosen to support EVs.
The Finance Chief of Tata Motors goes on to add, “hybrid is a CAFE compliant technology, nothing more than that.”
“From our perspective, we have always maintained that investment outlay for the government is limited and therefore, whatever they support should be towards technology that is likely to remain permanent, rather than transient technologies,” added Balaji.
There has been feverish lobbying with the government of India to review GST rates on hybrid vehicles – for and against over the recent months.
The market leader Maruti Suzuki along with its alliance partner Toyota has led from the front to popularise hybrid vehicles in the mainstream market. The top management at Japanese car makers – Maruti, Toyota and Honda Cars India have on multiple occasions expressed the benefits of lower Co2 footprint and higher fuel efficiency of Hybrids that help in reducing fuel imports.
Despite limited options of just 4 vehicles, the share of hybrid vehicles rose to about 1.7 to 2% of the overall market in 2023. On the contrary there are over a dozen electric vehicles in the marketplace, with similar penetration levels.
Balaji explained that the government, as part of its commitment towards a zero-emission economy, “needs to be very clear” – in terms of where they are going to put their money.
“Not every technology one will be able to invest in and hence they have rightly chosen what is likely to be a destination technology, where there is likely to be an upfront investment needed from the players so that we get to the destination,” he added.
The electric vehicles get the support of a lower GST of 5% and an additional benefit through production linked incentive scheme, whereas the hybrid vehicles invite 43-50% GST.
Rationalising further – Balaji argued that EVs and hybrids are not to be compared, it is diesel and hybrids where the comparison needs to be done.
“Today there is no subsidy available on petrol, diesel, or CNG vehicles and hybrids are no different from that, and need to be seen in that light,” he added.
It is a matter of perspective, feels Balaji adding, “It is more about how you would want to position EVs or hybrids, we firmly believe, any support needs to go towards (segments) wherever there is a viability gap issue, not where entities need support to comply.”
He believed that there are rivals who are investing in hybrid vehicles just to comply with upcoming CAFÉ norms – if they don’t – they may be compelled to pay hefty penalties.
Balaji says some places there is an incentive (EVs) and some places there is a penalty (ICE driven) and CAFE is a “good enough policy” to ensure that vehicle makers get their fleet emission compliant.
“As far as hybrids are concerned, it is a CAFE-compliant technology, nothing more than that. If you don’t comply with CAFE, there will be significant fines coming OEMS way. Therefore, people need to invest to ensure they comply with CAFE, it is no different from BS-VI phase 2, where all of us invested to ensure that we are compliant with the standard, that is where (push-on) hybrids come in,” he elaborated.