The Uttar Pradesh government last week announced a 100% tax waiver on hybrid vehicles similar to that of EVs. 
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The Uttar Pradesh government last week announced a 100% tax waiver on hybrid vehicles similar to that of EVs. Domestic electric vehicle sales continue to witness a downward trend despite the government support and state subsidies. The electric vehicle (EV) retail sales declined 13.51% year-on-year to 6,894 units in June this year, as against 7,971 units in the same period last year, according to the latest data released by FADA (Federation of Automobiles Dealers Association).
Owing to a decline in sales, several electric vehicle manufacturers such as Tata Motors and MG Motors India earlier this year, have already decreased the price of their EV models. While Tata Motors have declined the price of its flagship EV and most popular model Nexon.ev by Rs 1.2 lakh citing a reduction in lithium-ion battery prices globally, JSW MG Motor India also reduced the price of ZS EV and MG Comet stating similar reasons.
Meanwhile, apart from FAME (Faster Adoption of Manufacturing of Hybrid and Electric Vehicles) subsidy and PLI (Production-Linked Incentive) scheme, several states such as Uttar Pradesh, Tamil Nadu have given a tax waiver on EVs.
Owing to this, in these states, EVs have become much cheaper and are priced below Rs 20 lakh. For example, Tata Nexon.ev is cheaper in Arunachal Pradesh, Assam, Chhattisgarh, Daman & Diu, Delhi, Goa, Himachal Pradesh, Karnataka, Lakshadweep, Madhya Pradesh, Odisha, Puducherry, Punjab, Rajasthan, Sikkim, Tripura, Uttarakhand and Uttar Pradesh, where the country’s most popular EV is priced below Rs 20 lakhs.
Here are the states where Tata Nexon.ev is cheaper:
Despite a decline in sales, automobile manufacturers continue to introduce new EV models across price points, thus spoiling consumers with various choices. For example, Chinese automaker BYD introduced three new variants of its popular SUV Atto 3 on Wednesday at a starting price of Rs25 lakh.
Interestingly, EVs attract a GST (goods and services tax) of 5%, as against 43% GST on hybrid cars, 28% GST on CNG (compressed natural gas) vehicles and 49% GST on ICE vehicles.
Meanwhile, as the debate between hybrids versus EVs heats up, the Uttar Pradesh government last week announced a 100% tax waiver on hybrid vehicles similar to that of EVs. The move has fuelled speculation that other states might take similar steps, thus further impacting electric vehicle sales. In the past several months, hybrid vehicle sales have overtaken electric vehicle sales globally. In the domestic market, a similar scenario continues to unfold. In June, the hybrid vehicle accounted for 2.3% of total domestic sales as against 2.1% sales of EVs.
Analysts, however, believe that the UP government’s decision will only have an impact on ICE vehicle sales in India. “Hybrid is a great transition step towards electrification. Hybrids are a good 3-5 lacs more expensive than their petrol counterparts, by removing road tax, their acquisition price will become similar. This will reduce fuel requirements as well as reduce pollution. It should not have a negative effect on EVs and will mostly pull share from petrol cars,” says Anurag Singh, MD, Primus Partner.
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