Lower taxes on hybrid cars could help boost EV adoption: Honda

Lower taxes on hybrid cars could help boost EV adoption: Honda

Reducing taxes on hybrid vehicles could lead to faster adoption of electric vehicles in the country, according to a senior official at Honda Cars India Ltd (HCIL). The automaker noted that hybrid technology is currently best suited for Indian conditions as it does not rely on external charging infrastructure. The total tax burden on hybrid vehicles in the country is 43 percent, including VAT, while battery electric vehicles are taxed at around 5 percent.

“There is a big gap (in taxes). So, yes, it would be a welcome step if the government could support us (by also lowering the tax on hybrid vehicles)… We ask the government if they would want to consider,” Honda Cars India Ltd (HCIL) Vice President (Marketing and Sales) Kunal Behl told PTI.

He went on to say, “We believe that if they (the government) can reduce it, the adoption of electric vehicles would be very fast.” Behl noted that hybrid vehicles can aid in the transition to all-electric vehicles while helping to reduce vehicle emissions and fossil fuel consumption.

“We really respect the government’s understanding that they want to lower emissions levels… they want to reduce fuel consumption, so both of these objectives are being met by the hybrid vehicles. So I’m sure there could potentially be some thought that goes into government.” to re-look at favorable terms where customers can adapt more quickly to such technologies,” he stated.

Honda believes that hybrids are the best solution for the country, as buyers have no range fears and there are no limits to the vehicle’s performance, Behl noted.

“In the current scenario, in our view, there is nothing better than this (hybrid).. it is the best solution at the moment,” he added. The company, which entered the mainstream hybrid segment with the introduction of City e:HEV, plans to eventually move to full battery electric vehicles, in line with the global vision of its Japan-based parent company.

Honda plans to launch 30 EV models globally by 2030, with annual production volume exceeding 20 lakh units. The major automaker plans to invest about $40 billion in the EV space over the next 10 years.

“The global direction is towards electrification..we believe Indian customers really want to be part of the electric aligns with our journey to carbon neutrality…If taxes go down I’m sure people will more quickly…” Behl said.

Until the full transition to electric cars takes place in the coming years, the automaker plans to continue introducing combustion engine cars to meet customer demand. As part of the strategy, Honda Cars India plans to enter the fast-growing mid-size SUV segment next year. It also plans to keep updating its sedan lineup according to market requirements, Behl noted.

“We have a strong market share in the sedan segment…so we definitely wouldn’t want to leave the sedan market…at the same time, we realize that SUV is an important market and customers expect Honda to come into this, that’s why we’ve come with a strong model.” he added.

When asked about the potential impact of the government’s plans to mandate six airbags in passenger cars, Behl noted that the industry as a whole has been going through tough times in recent years. Transitioning to BSVI emissions standards, COVID-19 impact, semiconductor shortages and rising input costs are the biggest challenges facing the auto industry, he noted.

“There is a cost to any kind of regulation…so yes, the direction of the government is understood, it’s a really nice direction and it also aligns with Honda’s direction of carbon neutrality and zero fatalities, so we’re joining that as well .. we also want to comply with the rules, but it also seems a little too early to us,” said Behl.

Currently, the debate on the matter is ongoing and whatever the decision comes, the company will definitely stick to it, he added. On the chip shortage, Behl noted that the problem is expected to persist in the coming months.

“So it’s very difficult to predict the growth outlook… Turning to the previous year there will definitely be growth for the industry and the company will also follow a similar kind of growth as the industry… It’s very difficult to get a ​perspective as the situation remains very dynamic,” he added.

Between April 2021 and March 31, 2022, the company shipped 82,074 units to dealers.