Why EVs may disrupt SUVs first

Sports Utility Vehicles (SUVs) attract the highest tax among cars, when the Goods and Services Tax (GST) compensation cess is added to the bill. The GST rate for cars, three-wheelers (3W) and two-wheelers (2W) is uniformly 28%, while that for electric vehicles (EVs) is 5%. But, when the compensation cess is added to the base GST rate, the tax differential shoots up. Then the total tax on SUVs goes up to 50%, while it goes up to 28% to 48% for other categories. Nomura, in its recent report, has said that it maintains its view that “the large SUV segment is the sweet spot to launch EVs due to the wide GST differential”