Indian and Foreign Hybrid Electric Vehicles: A Combination of Domestic and International Technology in Electrified Vehicles
The hybrid electric vehicle (HEV) market in India is currently in a growth phase, with a projected CAGR of around 6% between FY25-FY30, potentially reaching about 5.75 million units by 2030. This growth is driven by the historical leadership of global pioneers such as Toyota and Honda in hybrid technology, as well as the investments of Indian automakers like Tata Motors, Hyundai, Mahindra, and MG in hybrid technology as part of their broader electrification strategies.
Popular hybrid models in India include the Honda City e:HEV, the Maruti Suzuki Grand Vitara Hybrid, and the Toyota Innova HyCross, all known for their strong hybrid systems, impressive fuel efficiency, and smooth city driving. Additionally, the Ford Escape Hybrid, a practical and family-friendly SUV, offers a good balance of space, economy, and features.
The preference for hybrids is driven by their ability to provide improved fuel efficiency and lower emissions compared to traditional internal combustion engine (ICE) vehicles, while offering greater range and convenience relative to current EVs, especially given India's underdeveloped EV charging infrastructure. Hybrids appeal to consumers hesitant to fully switch to EVs due to concerns over range anxiety, charging infrastructure, and cost.
However, hybrid vehicles currently face higher taxes compared to EVs: 28% GST on hybrids versus 5% on EVs, along with additional cesses, raising the effective tax rate on hybrids to about 43%, making hybrids less financially attractive. This, combined with government incentives heavily skewed towards fully electric vehicles, limits the mass-market growth potential of hybrids.
In the coming years, the hybrid market is expected to grow steadily but may face uncertainty due to the tax and subsidy structure that favors EVs. With upcoming stricter emission norms like CAFE III and BS VII, OEMs will need to adopt multiple propulsion technologies, including hybrids, to comply. India's efforts to develop domestic battery raw materials and refining capacity will bolster overall EV growth but are less directly relevant to hybrids, which still rely on fuel efficiency technologies.
The market may see hybrid models as a transitional technology until EV infrastructure improves and costs decrease. Technological advancements like extended electric-only range, AI, and smart energy management systems will be integrated into hybrid vehicles. In Full Hybrid systems, the car can run on the engine, electric motor, or a combination of both.
In conclusion, hybrid electric vehicles in India occupy a strategic niche bridging the gap between traditional ICE vehicles and full EVs, offering benefits in fuel efficiency and convenience amid infrastructure challenges. However, their growth is hampered by taxation and policy preferences favoring EV adoption, positioning hybrids as a transitional technology rather than a mass-market solution in the near term.
- The growth of the hybrid electric vehicle (HEV) market in India is driven by the investments of Indian automakers like Tata Motors, Hyundai, Mahindra, and MG, who are incorporating hybrid technology into their broader electrification strategies.
- Popular hybrid models in India, such as the Honda City e:HEV,the Maruti Suzuki Grand Vitara Hybrid, and the Toyota Innova HyCross, are known for their strong hybrid systems, impressive fuel efficiency, and smooth city driving.
- The preference for hybrids is due to their ability to provide improved fuel efficiency and lower emissions compared to traditional internal combustion engine (ICE) vehicles, while offering greater range and convenience relative to current EVs.
- Hybrid vehicles, despite their advantages, currently face higher taxes compared to EVs, making them less financially attractive and limiting their mass-market growth potential. In the coming years, the hybrid market may face uncertainty due to the tax and subsidy structure that favors EVs.
