Race for EVs: Japanese carmakers go middle-of-the-road
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Unlike other global and local automakers betting big on the electric powertrain, the eastern giants are convinced the road to electric vehicles (EVs) will pass through a hybrid pit-stop for most car buyers in the country. Hence, Maruti Suzuki, Toyota Kirloskar and Honda Cars India are banking on hybrids as a critical “bridge strategy” before Indian consumers fully migrate to EVs.
“With hybrids, we give more opportunity to users to drive stress free, without range anxiety,” Honda Cars India’s newly-appointed president, Takuya Tsumura, told ET. “It’s really one of the good solutions at this time – the most reachable and, perhaps, the most practical model.”
These hybrids may come at a premium of 15-20% over conventional petrol cars, but may also deliver 35-40% higher fuel efficiency. In FY23, there will be a hybrid City sedan from Honda and hybrid SUVs from both Maruti Suzuki and Toyota Kirloskar.
Japanese carmakers believe introducing hybrids will eventually lead to higher localisation of parts for electric vehicles, making them more accessible to a larger customer base. Toyota, Suzuki and Honda have no plans of launching an electric car in India before 2025 and are currently working on localisation of hybrid vehicle parts.
Globally, Honda Motor has announced an investment of $40 billion, with plans of launching 30 new EVs by the end of the decade as it aims to achieve net zero emissions by 2050.
Separate Global Strategy
It expects to produce 2 million EVs annually by 2030.
Since the ecosystem for EVs is yet to come up in India, Tsumura believes hybrids are good solutions to reduce fuel consumption and tailpipe emissions. “It (City eHEV) is actually 40-45% better than petrol model. You can feel I’m saving something now, especially with high fuel prices,” he said.
But a bigger play on hybrids will come from Toyota-Suzuki combine in India. The much-awaited midsize SUV from Toyota is expected to come with a localised hybrid solution.
Toyota Kirloskar Motor vice-chairman Vikram Kirloskar said that in a country where 70% of the power is generated by coal-fired plants, “strong hybrids give the least amount of well-to-wheel carbon emissions.”
“We will continue pushing hybrids. As this 70% starts coming down and more renewable energy starts coming in, we will start seeing more and more EVs,” Kirloskar recently told ET. “Our objective is overall carbon reduction.”
Kirloskar said the vehicle architecture on electrified vehicles – whether hybrid, plug-in hybrid or electric – is essentially the same. “They have a lot of common components and we are trying to see what is best for each country. In a country like Norway, where it is 100% hydropower, electric vehicles make a lot of sense. I think we have to look at that,” Kirloskar said.
Tax Incentives
Steep levies imposed on hybrid vehicles remain a concern. On hybrids, India currently levies GST of 28% on small vehicles (of under 4 metre) and 43% on larger ones.
Industry experts believe the passenger vehicle segment will probably be the last to switch to EVs, due to the steep cost difference and need for stable power supplies.
Even at 30% EV penetration, the impact on the fuel import bill will not be significant, said an industry expert.
RC Bhargava, chairman of Maruti Suzuki, said recently at an ETAuto event that in a country like India, where per capita incomes are a fraction of those in Europe and the US and coal is the major source of electricity, EVs will not give the intended reduction in carbon emissions for the next 10-15 years. Hence, alternative technologies such as CNG, bio-CNG, ethanol and hybrid vehicles must be promoted.
“If we adopt whatever strategies they (the US and Europe) are following, I don’t think we will be doing justice to what we need to do in India,” Bhargava said, arguing for lower taxes on hybrid and CNG cars.
Honda’s Tsumura said discussions are on with Society of Indian Automobile Manufacturers to seek rationalisation in taxes on powerful hybrid vehicles.
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