Hybrid cars surge ahead with 27% growth in India, outpacing electric vehicles

Toyota has emerged as the largest selling brand in the domestic HEV market

Even as the battery electric vehicle (BEV) market faces challenges, hybrid electric vehicles (HEVs) are experiencing remarkable growth in India. According to data from JATO Dynamics India, the sale of hybrid cars, including both strong and plug-in versions, increased by 27 percent from January to July 2024, reaching 51,897 units compared to 40,811 units during the same period last year. This surge highlights a growing acceptance of hybrid vehicles among Indian consumers.

The rise in hybrid car sales is largely attributed to the popularity of strong hybrids, or HEVs, which saw a 27.1 percent increase in sales to 51,832 units from 40,773 units last year. Strong hybrids combine a conventional internal combustion engine (ICE) with a battery-powered electric motor, allowing them to run on both petrol or diesel and electric power. Unlike mild hybrids, which use a smaller battery to assist with electrical components and provide a minor boost during acceleration, strong hybrids can operate solely on electric power.

In addition to strong hybrids, mild hybrids also contributed to the growth in hybrid vehicle sales. When mild hybrid electric vehicles (MHEVs) are included, the total sales of hybrid vehicles reached 2,90,912 units in the first seven months of 2024, up 13 percent from 2,56,075 units in the same period last year.

Advantages of hybrid vehicles

The increasing popularity of hybrid vehicles can be attributed to several factors. Ravi Bhatia, Managing Director of JATO Dynamics India, explains that hybrids offer a balance between cost and eco-friendliness. "Hybrid cars are witnessing a major uptake because of the lower initial cost compared to full EVs. While there are fuel efficiency benefits without range anxiety, these vehicles are compatible with existing infrastructure," says Bhatia.

When asked why automakers are sharpening their focus on hybrids, Bhatia noted that there is a balance of eco-friendliness and practicality. “There are fuel savings without complete reliance on electricity and also because of familiarity with traditional powertrains. To top it all, there is a lower perceived risk compared to full EVs.”

Industry players claim that tax registration waiver on hybrids in states like Uttar Pradesh, etc., are helping the rising footfalls at dealerships.

Battery Electric Vehicles (BEVs), on the other hand, saw the growth rates tapering off over the last few months. The total number of BEVs went up by just 10 percent during Jan-July on a YOY basis at 54,118 units as compared to 49,028 units during the same period last year, JATO Dynamics India data showed.

According to Bhatia, Hybrids are outpacing BEVs due to the lower barrier to entry for consumers, easier integration into existing lifestyles, reduced dependency on charging infrastructure. “It is serving as a bridge technology for cautious adopters.” he noted.

Market dynamics and automaker strategies

The success of hybrid vehicles in India is prompting automakers to expand their offerings in this segment. Over the past few years, several affordable hybrid models have entered the market, including the Honda City Hybrid, Toyota Urban Cruiser Hyryder, and Maruti Grand Vitara Hybrid. These models have been priced competitively, making them accessible to a wider range of consumers.

Looking ahead, automakers are preparing to launch a new wave of hybrid vehicles in the Rs 15-25 lakh price range, including hybrid versions of popular models like the Maruti Suzuki Fronx and Swift, Kia Carnival, Toyota Fortuner, and Hyundai Kona. These upcoming launches are expected to further boost hybrid vehicle sales in India.

Toyota Kirloskar Motor (TKM) has emerged as a leader in the domestic HEV market. The company has sold over 50,000 units of its hybrid models, including the Innova Hycross, Urban Cruiser Hyryder, Camry Hybrid, and Vellfire, so far this year. The Innova Hycross and Urban Cruiser Hyryder are the top-selling models, with 30,505 and 21,737 units sold year-to-date, respectively.

“Given the existing market sentiments, we are confident of maintaining the growth momentum. Market trends are also positive with customers from across the country including smaller markets, taking cognizance of contributing towards the country’ s green mobility goals,” said Vikram Gulati, Country Head and Executive Vice President, Corporate Affairs and Governance, TKM.

Maruti Suzuki is also focusing on expanding its hybrid vehicle portfolio. The company sold 6,111 units of the hybrid version of the Grand Vitara and 1,975 units of the Invicto in the first half of the year. The country's largest carmaker asserted that it manage to see a 62.47 increase in its total strong hybrid car sales at 23,394 units during April-June 2024 period as against 14,399 units in same period last year.

Rahul Bharti, Executive Director, Corporate Affairs, Maruti Suzuki claims that strong hybrid cars are pricier than a pure petrol/diesel vehicle and has a viability gap which needs to be addressed. “Globally, most countries of the world have some kind of financial support to encourage mass adoption of hybrids. Customer acceptance and appreciation of hybrid technology is visible from more than doubling of sales from FY 2022-23,” noted Bharti.

Honda Cars India Ltd (HCIL) has also made significant strides in the hybrid market with the introduction of the Honda City e: HEV by selling 1,953 units of this model last year and 657 units YTD.  Honda Cars India Vice President (Marketing & Sales) Kunal Behl stated that he hybrid version of the City accounted for 11 percent of total City sales last year and has already increased to 13 percent this year and the company plans to continue developing both hybrid and electric powertrains as part of its future product lineup.

Challenges and future outlook

While hybrid vehicles are gaining traction, the BEV market is experiencing slower growth. BEV sales increased by just 10 percent from January to July 2024, reaching 54,118 units compared to 49,028 units in the same period last year. According to Bhatia, hybrids are currently outpacing BEVs due to their lower entry barriers, easier integration into existing lifestyles, and reduced dependency on charging infrastructure. "It is serving as a bridge technology for cautious adopters," he notes.

Despite the current momentum for hybrids, the landscape may shift in the coming years as BEV infrastructure improves, battery technology advances, and government incentives for the promotion of full EVs. S&P Global Mobility projects that while HEVs accounted for less than 0.1 percent of passenger vehicle sales in 2021, their share is expected to surpass 3 percent in 2024. As consumer attitudes towards electrification continue to evolve, the competition between hybrid and electric vehicles is likely to intensify.