Lower taxes on hybrid cars may contribute to faster adoption of electric vehicles in India: Honda
Reducing taxes on hybrid vehicles can lead to faster adoption of electric vehicles in the country, according to a senior official from Honda Cars India Ltd (HCIL).
The automaker noted that hybrid technology is currently best suited to Indian conditions as it does not depend on external charging infrastructure.
The total tax incidence on hybrid vehicles in the country is 43% including GST, while battery electric vehicles are subject to a tax of around 5%.
“There is a big gap (in the taxes). So, yes, it would be a welcome step if the government could support us (by also reducing the tax on hybrid vehicles)… We are asking the government if they could consider it,” Kunal Behl, vice president (marketing and sales) of Honda Cars India Ltd (HCIL), told PTI.
He further said, “We believe that if they (the government) can reduce it, the adoption of electric vehicles would be very rapid.”
Behl noted that hybrid vehicles could aid in the transition to fully electric vehicles while helping to reduce vehicle emissions and fossil fuel consumption.
“We really respect the government’s understanding that they want to reduce emissions levels…they want to reduce fuel consumption, so both of these objectives are achieved by hybrid vehicles. So I’m sure there could be have a thought that goes into the government looking for favorable conditions where customers can adapt more quickly to these technologies,” he said.
Honda believes hybrids are the best fit for the country because buyers don’t experience range anxiety issues nor are there any drags on vehicle performance, Behl noted.
“In our opinion, in the current scenario, there is nothing better than this (hybrid). It is the best solution at the moment,” he added.
The company, which made a foray into the mainstream hybrid segment with the introduction of City e:HEV, plans to eventually transition to full-battery electric vehicles in line with its Japan-based parent company’s overall vision.
Honda plans to launch 30 electric vehicle models globally by 2030, with an annual production volume of more than 20 lakh.
The auto major aims to invest around $40 billion over the next 10 years in the electric vehicle space.
“The global direction is toward electrification…,” Behl said.
Until the full transition to electric cars occurs in the next few years, the automaker plans to continue introducing cars with internal combustion engines to meet customer demand.
As part of the strategy, Honda Cars India plans to enter the rapidly growing mid-size SUV segment next year. It also plans to continue refreshing its sedan lineup in line with market demands, Behl noted.
“We have a strong market share in the sedan segment…so we certainly wouldn’t like to leave the sedan market…at the same time, we realize that SUVs are a big market and customers expect until Honda enters this segment, that’s why we will offer a strong model..”, he added.
Asked about the possible impact of government plans to mandate six airbags in passenger vehicles, Behl noted that the industry as a whole has been going through tough times in recent years.
The transition to BSVI emission standards, the impact of COVID-19, shortage of semiconductors and rising input costs are major challenges plaguing the auto industry, he noted.
“Every type of regulation has a cost… so yes the government direction is understood, it’s a very good direction and it also aligns with Honda’s direction on carbon neutrality and zero road fatalities, so we’re okay with that as well. we also want to comply with the regulations, but it also seems a bit too early for us,” Behl said.
Currently, the debate is ongoing on the issue and whatever decision is made, the company will definitely stick to it, he added. Regarding the chip shortage, Behl noted that the problem is expected to continue for the next two months.
“So it’s very difficult to predict the growth outlook… In terms of the previous year, there will definitely be growth for the industry and the business will also follow a similar type of growth as the industry… is very difficult to give an overview as the situation remains very dynamic,” he added.
Between April 2021 and March 31, 2022, the company shipped 82,074 units to dealerships.