A few notable automotive brands are lobbying the government for putting range extended electric vehicle (REEV), a new kind of vehicle technology that dramatically reduces dependence on external charging, unlike a traditional EV, under the lowest slab of goods and services tax (GST).
Like an EV, an REEV is also powered by a battery pack, but it does not depend exclusively on a wall-charging power source, thereby eliminating vehicle range anxiety. A small fossil fuel-fired engine acts as an on-board generator to recharge batteries in an REEV.
Now, only pure EVs and hydrogen fuel cell vehicles attract 5 percent GST, while all other passenger vehicles which are typically powered by petrol, diesel, CNG, and all types of hybrid vehicles, are placed under 18 percent and 40 percent GST slabs.
REEVs recognised as EVs
Depending on the battery, engine and vehicle type, REEVs can generate a mileage of around 35 km per litre, which is higher than hybrid and plug-in hybrid EVs. Due to the need to accommodate a motor, battery, and engine, REEVs are generally larger vehicles, often exceeding 4.5 metres in length, which would put them in the 40 percent GST slab.
However, the recent draft CAFÉ (Corporate Average Fuel Efficiency) 3 norms notification dated September 25, 2025, by the Bureau of Energy Efficiency recognises REEV as equivalent to EVs.
In an exclusive interaction with Moneycontrol, Ranjan Nayak, Chief Executive Officer, JSW Motors, said: “Although REEVs are electric-driven vehicles, ambiguity in GST classification risks place them under higher tax slabs, undermining affordability. The government must classify REEVs under the 5 percent GST rate.”
The Associated Chambers of Commerce and Industry of India (Assocham), an industry body that is leading the lobby for the lower GST, claimed that REEV’s emission profile is similar to pure EVs and nearly 70 percent less than internal combustion engine (ICE) vehicles in normal drive conditions.
Surge in demand abroad
China is the only market where REEVs are currently available at scale. The market share of REEVs grew to 13 percent (from 4 percent in 2021) in China and it is expected to reach 16 percent by 2030, showing growing customer preference with reduced public charging dependence, despite a robust charging network presence, Assocham said in a letter sent to the Ministry of Heavy Industries November 18.
The surge in demand for REEVs has caught the attention of auto manufacturers such as Volkswagen and Stellantis in Europe and the United States as one potential way to boost EV sales growth.
In India, the entry of certain automotive brands is dependent on the outcome of the government’s GST stance on REEV.
Speaking to Moneycontrol on November 18, Shailesh Hazela, managing director and CEO, Stellantis India, said: “We have REEV technology in a few of our brands, including Leapmotor. We will see which brand it can interject. This is one of the questions which we are having in our minds ...that is what do we need to do with Leapmotor when we will have all the technologies.”
Adopting REEV technology can reduce India’s capital expenditure on highway charging infrastructure. India needs to invest around Rs 16,000 crore in public charging infrastructure in the next 5 years, just to support the estimated Electric Passenger Vehicle Stock, with further investments required to support other electric vehicle categories including electric buses and trucks, said the Assocham letter.
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