Tata Motors Managing Director Guenter Butschek expressed strong displeasure at the claimed change of stance by the government on incentivising hybrid vehicles.
The 58 year-old chief executive said incentivising hybrid cars will upset investments lined up by private companies who have designed business plans as per government’s guidance of going fully electric as a long term policy. On the sidelines of unveiling the Harrier SUV, Butschek was reacting to a media report that stated the government’s intent to restore the withdrawn incentives on hybrid cars.
Speaking to Moneycontrol, Butschek said, “I don’t get it anymore, I really don’t. Why do we consistently go from left to right instead of aligning everything towards electrification. The MOVE summit was about electrification. Except representatives of one part of the world who has brought back the hybrid story for consideration, everyone was talking about electric vehicles. This is like taking two steps forward and three steps backwards. I am speechless.”
Last year, the government decided to put hybrid cars (cars that are powered by a mix of battery and fossil fuel) under the highest tax bracket under the Goods & Services Tax (GST) regime. Thus, tax on hybrid vehicles jumped to 43 percent from 20-30 percent. Electric cars are the least taxed segment attracting only 12 percent GST.
This was followed by protests from certain manufacturers such as Toyota Motor Corporation and Maruti Suzuki parent Suzuki Motor Corporation that have specialised in hybrid technology. This even stretched to the extent that these companies met the Indian ambassador in Japan to voice their discontent last year.
Japanese car companies are believed to have lobbied hard over the past several months with the government for reincentivising hybrids, a move which has irked other manufacturers such as Tata Motors and Mahindra & Mahindra who are focusing only on electric vehicles. After joining forces, Toyota and Suzuki are laying a strong focus on hybrids as part of their future product portfolio
Heads of several companies, however, agree that India will need the bridge of hybrids for its move to fully electric mobility in the long run. Hybrid vehicles will ‘educate the customer on battery power and its consumption pattern’.
But if the government decides to put electric and hybrid vehicles in the same tax bracket the market will see a much slower development of the EV ecosystem such as charging stations and factories manufacturing lithium-ion batteries.
“I do hope this is not more than an intent and that the subject is open for discussions otherwise we are going to bring a huge degree of confusion to the larger industry, including the private sector which is finalising investments. There are so many companies ready to set-up charging stations and even battery manufacturing factories. Now, suddenly with hybrids there is no need for those investments,” Butschek added.
Tata Motors is also developing hybrid powertrains but as a stopgap solution before moving to fully electric in later years. The company has developed electric versions of the Tiago, Tigor, Zest and Bolt and is supplying the Tigor electric to a government company.
“So far there is no change in policy of the government, but it is a discussion at the Department of Heavy Industries (DHI). I do not support this statement of intent. The government does not have an unlimited budget to support sustainable mobility. So prodding something that is anyway required in order to meet CAFE norms (hybrid) in 2022 is a must because as diesel share declines you need to compensate for higher CO2 which comes with a petrol engine. At no point in the past has the industry ever enjoyed a subsidy from the government for something that is already technologically required. It is not ethical to ask the government to actually subsidise your technological needs,” Butschek stated.