What’s Driving Hybrid Cars Popularity in India?
Asignificant change is coming to India's automobile sector. Recently, Minister of Road Transport and Highways, Nitin Gadkari, announced the government's plan to phase out petrol and diesel vehicles in a systematic manner. Alongside, he also emphasised on promoting hybrid vehicles.
Let's understand if India is ready for hybrid vehicles and what it means for investors.
What's Happening?
According to ThePrint, in a recent media conference, Minister Nitin Gadkari urged the Finance Minister to consider a reduction in GST for passenger vehicles using hybrid technology.
This announcement stirred the automotive industry. However, with the Model Code of Conduct for the 2024 Lok Sabha elections ahead and no expectations of any GST Council meetings until the end of June, the possibility of this happening soon is low. But if the proposal progresses, it could make hybrids much more attractive to buyers and beneficial for automotive companies.
Is India Ready for Hybrid Cars?
Hybrid cars operate with both an electric motor and a traditional engine (usually petrol). These cars can run on electric mode for short distances and rely on the petrol engine for longer distances. Experts believe that hybrid cars could serve as a good bridge to adopting electric vehicles. Currently, the charging infrastructure for electric vehicles is not fully developed across the country. In this scenario, hybrid cars could emerge as a better alternative.
Rising Trend of Hybrids
According to Fortune India, while discussions about electric cars are plenty in India, hybrids are currently surging ahead. The numbers speak volumes: in 2022, only 18,000 hybrid cars were sold, but by 2023, this figure rose to 83,000. This means that while hybrids held just a 0.5% share of the entire market in 2022, it increased to 2% in 2023.
If we talk about the sales of hybrid cars during just September to November 2023, they surpass the sales of EVs.
These figures indicate that hybrid vehicles could play a significant role in India in the coming years. They not only help reduce pollution but also encourage people to move towards electric vehicles.
What's in it for Investors?
According to The Hindu Business Line, between April 2023 and January 2024, Maruti sold more than 14,000 hybrid cars, compared to 8,500 in the same period last year. Similarly, Toyota is witnessing a surge in demand for its hybrid SUVs. The Innova HyCross, launched in November 2022, has sold more than 50,000 units to date.
What’s Next?
The Hindu Business Line states that sales of hybrid cars are rapidly increasing. Some experts see hybrid cars as a 'bridge' for a complete transition to electric vehicles. However, as per Mint, the success of hybrid cars will depend on government policies, GST rates, and the development of electric vehicle infrastructure.