Most carmakers in the country have deliberately skipped the hybrid route and jumped onto the EV bandwagon, but Japanese brands like Maruti Suzuki, Toyota and Honda have worked at democratising hybrids in India. EVs comprise just 2-3 percent of the total passenger vehicle market, let alone the fact that the charging infrastructure around it is still underdeveloped. So, with ICE vehicles still constituting over 95 percent of the market, there’s certainly room for hybrids to gain a stronger footing.
Vikram Gulati, country head and executive vice-president, Toyota India, feels that India hasn’t missed the hybrid bus just yet. Almost a quarter of all Grand Vitara/Hyryder sales are of the hybrid variants, while in the case of the Innova Hycross, Toyota had to temporarily pause bookings of the hybrid versions owing to very high demand. Even Maruti, with the Invicto, opted for only the strong-hybrid powertrain anticipating strong acceptance. More recently, Renault, too, has expressed its intent to bring hybrids to India.
"Hybrids are not a transitory technology"
In a recent interaction with Autocar India, Gulati says, “It’s not fair to call hybrids a transitory technology. Instead, hybrids, like EVs, face a similar set of challenges as far as adoption is concerned.”
“The challenges are around the acquisition price and total cost of ownership. And the Indian consumer is quite smart. They can work out the total cost of ownership very effectively even though they may not be familiar with the term. When you go into the more mass-market segments, those equations do come into play. Higher sticker price is an inhibitor as we have seen in case of EVs,” he elaborated.
Hybrids, however, have a distinct advantage over EVs: buyers can let go of range anxiety and don't have to rely on a sporadic charging network. There’s also the case of fantastic fuel economy, which is among the top priorities for car buyers in India. This is what makes hybrids a lot more scalable and easier to adopt, when compared to full-electric vehicles.
Gulati also points out that hybrids have started gaining popularity in just the last two years, and until the arrival of the technology in midsize SUVs and MPVs, there weren’t any hybrids in the core segments. Given the rate of adoption of the technology in such a short time, Gulati said, “I think in the nascent phase in which we are, there is a huge room yet to be covered.” And not just in metro cities, but, as Gulati points out, strong-hybrid variants have found takers even in semi-urban areas.
Government support will be key for further democratisation
Several carmakers, including Maruti Suzuki, have been lobbying the government for long to reduce taxes on hybrid vehicles. Currently, EVs are only charged 5 percent GST, which, further aided by initial subsidies, explains their rapid adoption rate. Strong hybrids, on the other hand, attract up to 43 percent GST – at par with several ICE-only categories despite emitting far fewer emissions.
As mentioned, the initial acquisition cost is the biggest hurdle for strong hybrids, particularly when it has to be adapted to smaller vehicles such as hatchbacks and compact SUVs. “Consumer acceptance from a price or value proposition perspective is going to be a critical factor for all green technologies,” said Gulati.
So, until the government offers some relief, hybrid technology will be restricted to just the larger cars. Buyers in the midsize and higher segments have some price flexibility and are willing to pay the initial premium. Hatchback or compact SUV buyers, however, are a lot more cost conscious, and may not be willing to pay the premium that the hybrid tech demands as the tech constitutes a major percentage of the total cost of the car.
Even though the Union Minister of Road, Transport and Highways, Nitin Gadkari, has reiterated the role of all sorts of green technologies for a sustainable future, including hybrids, hydrogen and flex-fuel, real democratisation can only happen when supported with requisite policies.
“Hopefully, if a policy that solves the current taxation issue we are facing in smaller vehicles were to come about, many more people can jump into the ecosystem, and let scale do the rest. And once that happens, it will not only benefit further democratisation of hybrids, but also EVs, because the same ecosystem feeds EVs as well. So, that becomes a vicious cycle,” Gulati said.
On that front, the government has previously hinted at lower taxation for hybrids; one that has a direct correlation with emissions. But that hasn’t materialised yet, and it remains to be seen if it will at all.