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Hybrid Vehicles: Automakers Oppose Uttar Pradesh’s Incentives 

Hyundai, Kia Motors, Tata, and Mahindra sought the most populous Indian state. Not to allow incentives on hybrid vehicles, saying this move would affect the plans for electric cars and investment. 

Competition Between Automakers Intensifies

Four distinct company letters sent to Uttar Pradesh obtained by Reuters will shed light on the competition between automobile companies in a nation where taxation favors EVs. 

For instance, in a recent lobbying victory for Toyota, Uttar Pradesh was the largest car market in the country. And a contributor to 10 percent of car sales, deregistered some hybrid cars last month, making them 10 percent cheaper. This eliminates up to $5,200 on a Toyota Camry hybrid sedan.

Automakers’ Concerns Over Hybrid Incentives

Hyundai, Kia, Tata, and Mahindra & Mahindra have not issued statements on Uttar Pradesh’s move. Still, their letters to the state show they are against the tax rebates because the Electric Vehicle Programme aims to make 30% of new vehicle sales electric by 2030 in India. 

Hyundai, which is planning to hit the Indian market with a $3 billion Initial Public Offer, said in a letter on July 12 that the decision would ‘derail’ the electrification of transportation, while Kia said encouraging hybrids would harm the efforts to popularize Battery EVs. This episode began with Mahindra’s warning about the EV market’s bankruptcy.

Tata’s Concerns and Investment Plans

Tata, which invested in the EV business with the help of TPG, raising $1 billion in 2021, said in its letter on July 11 that hybrids have put at risk the committed $9bn needed to build the EV ecosystem. It described this as the outcome of the government of PM Narendra Modi’s “clear focus” on the sector. 

Hyundai Motor Co. had no comment, and the Tata, Mahindra, and Kia domains were unanswered. None of these companies have hybrids in their India portfolio. 

Uttar Pradesh transport official Vijay Kumar told Reuters that the state government is studying the points raised by the opposing companies. And no decision has yet been made. He added that all will be discussed at an industry meeting on August 11. 

The Modi government levies a federal tax of only 5 percent on EVs. At the same time, hybrids do not attract a tax of less than 43 percent, just below the 48 percent tax on gasoline vehicles. Road and registration taxes are extra, especially for states like Uttar Pradesh, which removed the tax.

India’s Current Automotive Market

India registered 4.2 million car sales in its 2023-24 financial year. Hybrid vehicles constituted less than 100,000, and electric vehicles constituted less than 100,000. 

Some executives said Uttar Pradesh’s move threatens other states with imposing a new tax on EVs, which players feel is detrimental. 

However, hybrid supporters argue that there is currently insufficient charging for EVs in India. Hybrids that combine battery power with a gasoline engine are less pollutive than cars that rely solely on fossil fuels. 

In a statement, Maruti said, ” If hybrids are encouraged in addition to EVs, it will bring major incremental gains towards national objectives of oil import reduction and CO2 reduction. ” Toyota did not reply to Reuters’ questions and emails.

FAQs 

Why did Hyundai Kia, Tata, and Mahindra demonstrate against incentives offered on hybrid vehicles in Uttar Pradesh?

These companies stated that incentives for hybrid vehicles would undermine the shift to electric mobility and jeopardize the charging of Battery Electric Vehicles (BEVs), which is against India’s desire to achieve 30% of new vehicle sales by 2030.

How much of an affirmative role does Uttar Pradesh play in India’s automobile industry? 

It must be noted that Uttar Pradesh is the largest car market in all of India, which accounts of 10% of car sales in the country, hereby, the decision made in this state will significantly affect automobile market of India. 

What do you think Tata Motors is worried about regarding the incentives for hybrids? 

Tata Motors stated that claiming that hybrids are threatening the $9 billion required to develop the ecosystem for the EV market threatens the government’s priority for the EV segment. 

What makes advocates of hybrids have a positive outlook for hybrids? 

Hybrid backers state that vehicles that use both batteries and a gasoline engine are less polluting than conventional internal combustion engine vehicles and can … give important benefits in cutting the use of imported oil and CO2 emissions rates.

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