No subsidy: Will Delhi government’s action hit Tata Nexon sales?

Nexon EV - 5

The temporary suspension of subsidy to Tata Motors’ vehicle (EV), Tata Nexon, by the Delhi government is a first-of-its-kind action by a state government on the basis of a single complaint. This makes the EV expensive by nearly Rs 300,000, pushing its on-road retail price to Rs 1,616,393.

With the subsidy, the on-road price of the SUV would be Rs 1,325,893. The suspension is with effect from March 1, 2021, the day when the Delhi government announced the order.

While the Nexon EV has clocked cumulative sales of more than 3,000 since its launch in January 2020 and is already the highest-selling electric car in India, it is not immediately known how much of these sales came from Delhi.

The Delhi government subsidy is the highest in India, making it a very lucrative market. There is also a subsidy offered by the central government.

Together with the subsidy of Rs 300,000 offered by the Centre, the on-road price of the Nexon EV XZ+ in Delhi, at Rs 11.55 lakh, is almost on par with the petrol variant of the same model priced at Rs 10.95 lakh, on-road. However, the central subsidy applies only to commercial buyers.

Kailash Gahlot, cabinet minister in charge of transport, tweeted: “Delhi government has decided to suspend subsidy on an EV car model, pending final report of a committee, due to complaints by multiple users of sub-standard range performance. We are committed to support EVs but not at the cost of trust and confidence of citizens in claims by manufacturers”.

Gahlot’s tweet attracted responses that were critical of the step taken by the Delhi government, with many calling it drastic and a step backwards in the effort to adopt EVs on a mass scale.

Being Nexon EV owner myself, getting 250+ in real world is feasible with little sensible change to driving style. Removing subsidy is step backward to the adoption of EV and @kgahlot sir, request to pls take the decision back. And @TatamotorsEV to publish a minimum range as well.

— Vishal Bhowmik (@vishal_bhowmik) March 1, 2021

Don’t think Govt. should take a drastic step based on 1-2 complaints. I purchased Nexon EV from the same dealership in Nov 2020. The sales executive clearly informed that real world range reported by customers was 220kms. By adapting my driving style I am able to achieve more. pic.twitter.com/bqS9usPpGA

— Souvik Das Gupta (@souvikdg) March 2, 2021

A Tata Motors spokesperson, while replying to a mail from Moneycontrol on whether the company will talk to the Delhi government, reiterated the statement it sent on March 1.

“It is unfortunate to receive this order from the Delhi Transport Commission. We will continue to engage constructively to protect the interests of our customers,” the company statement said.

“The Nexon EV is the only personal segment EV available in the market today that meets the stringent FAME norms… We have been receiving several positive testimonials from our customers... We are extremely confident about the value proposition of the Nexon EV, which since its launch a year ago, has consistently grown in popularity to become India’s largest selling EV with thousands of families enjoying the pleasure of owning and driving it,” it said.

The Nexon EV is one of the three electric SUVs sold in Delhi, and in the rest of the country. The MG ZS EV and Hyundai Kona are the other two. These two models do not enjoy any subsidy by the Delhi government as they are priced above Rs 20 lakh.

A similar issue had cropped up in 2018.  Tata Motors had issued a statement backing the Tigor EV, which it was supplying to the Centre-backed Energy Efficiency Services (EESL), after a media report said that government officials refused to use the electric cars provided by Tata Motors and Mahindra & Mahindra due to low range.

In 2019, Tata Motors did increase the driving range of the Tigor EV to an ARAI-certified 213 km, up from the earlier 130 km. It was the first electric car from Tata Motors. The Nexon EV is the second.