India’s biggest automakers are seeking to block a pollution management body’s attempts to promote hybrid vehicles in government fleets in and around New Delhi, saying it will disrupt adoption of cleaner battery electric cars and hit investments, documents show.
Companies, including Mahindra & Mahindra and Tata Motors, are lobbying the ministry of heavy industries to overturn an attempt to equate hybrids with EVs and ensure incentives for all government programmes are restricted to electric models, five company letters seen by Reuters show.
In a May 2 advisory, the Commission for Air Quality Management, tasked with fixing severe air pollution levels in India’s capital region, categorised strong hybrids as “cleaner vehicles” recommending their use in government fleets, a move that caught carmakers by surprise.
Given the “ultra-high density” of vehicular traffic in New Delhi and nearby areas, there is a need to move away from “polluting vehicles, dependent purely on fossil fuels like diesel and petrol”, the commission said.
Automakers, however, argue that hybrids – which use a battery and combustion engine – are reliant on fossil fuels whereas EVs produce zero tailpipe emissions, making them an effective solution for the urban air pollution crisis.
“Our plea is for government policy and incentives to stay firmly focused only on EVs,” Mahindra said in its May 15 letter to the heavy industries ministry.
Along with Tata and Mahindra, JSW MG Motor, Hyundai Motor and Kia Corp have also written to the ministry in support of electric cars, rekindling their face-off with hybrid proponents like Toyota Motor and Maruti Suzuki.
Tata, Mahindra, JSW MG Motor, Hyundai , Kia Corp and the ministry of heavy industries did not respond to requests for comment.
Policy uncertainty
The potential opportunity is huge – of the 847,544 vehicles in use by government agencies across India in 2022, only 5,384 were EVs – less than 1%, official data showed.
A major concern for EV makers is that support for hybrids dilutes the Indian government’s own policy which incentivises only EVs in its production-linked schemes and other programmes.
It will also create confusion among car buyers, companies and investors, hurting EV sales at a time when their growth is already slowing due to inadequate charging infrastructure and high upfront vehicle costs.
“The lack of a consistent and predictable policy environment may deter long-term investors … particularly in high-capex, technology-intensive sectors like EV,” said Tata, which has raised $1 billion from private equity firm TPG for its EV push.
Tata in its May 15 letter said, the commission’s move will undermine current and proposed EV investments, impact India’s global image as an investor friendly destination and send mixed signals to international stakeholders.
Carmakers in India are expected to invest over $10 billion through 2030 to manufacture lithium-ion cells, EVs and batteries, ratings agency Moody’s said in a report, adding EV adoption rates in India are still low versus China, Europe and the U.S.
Mahindra’s EV unit counts Singapore’s Temasek and British International Investment among investors while Hyundai plans to invest over $500 million in EVs in India.
