Electric vehicle prices in India likely to rise as China cuts key incentive: Report

The decision, taken on January 8, poses a challenge for Indian EV manufacturers that rely heavily on Chinese suppliers such as BYD and CATL

A low-key policy move by Beijing is set to raise electric vehicle prices in India at a time when the EV sector’s tax advantage over internal combustion engines is already narrowing, a report by Mint said on January 20.

China has announced a cut in export tax rebates on lithium-ion batteries from 9% to 6% effective April 1, with plans to withdraw the incentive entirely within a year, the report said. The decision, taken on January 8, poses a challenge for Indian EV manufacturers that rely heavily on Chinese suppliers such as BYD and CATL, and comes amid a sharp rise in lithium prices over the past year.

With batteries accounting for more than a third of an electric vehicle’s total cost, higher battery prices could directly hit manufacturers’ margins unless the additional cost is passed on to consumers, the paper said. Companies that depend on short-term battery sourcing arrangements are expected to feel the maximum impact of the move.

The impact is likely to be felt in the market in the next two weeks, a company executive told Mint, adding that a rush to build inventory is expected ahead of the cut in rebate.