India’s electric push to help Chinese carmakers
New policy likely to favour electric vehicles over hybrid, conventional cars
India’s ambitious plan to push electric vehicles at the expense of other technologies could benefit Chinese car makers seeking to enter the market, but is worrying established automakers in the country who have so far focused on making hybrid models.
India’s most influential government think tank unveiled a policy blueprint this month aimed at electrifying all vehicles in the country by 2032, in a move that is catching the attention of car makers that are already investing in electric technology in China such as BYD and SAIC.
The May 12 report by Niti Aayog, the planning body headed by Prime Minister Narendra Modi, recommends lower taxes and loan interest rates on electric vehicles while capping sales of petrol and diesel cars, seen as a radical shift in policy.
India also plans to impose higher taxes on hybrid vehicles compared with electric, under a new unified tax regime set to come into effect from July 1, upsetting car makers like Maruti Suzuki and Toyota Motor.
The prospect of India aggressively promoting electric vehicles was a “big opportunity”, a source close to SAIC, China’s biggest automaker, said. “For a newcomer, this is a good chance to establish a modern, innovative brand image,” the source said, although they added the company would need more clarity on policy before deciding whether to launch electric vehicles in India.
Earlier this year SAIC set up a local unit called MG Motor, which is finalising plans to buy a car manufacturing plant in western India.
Warren Buffett-backed BYD already builds electric buses in the country, while rival Chongqing Changan has said enter India by 2020.
BYD said in a statement the company would have “a lot more confidence” to engage in the Indian market if the government supported the proposed policy.
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While the Niti Aayog report has not yet been formally adopted, government sources have said it was likely to form the basis of a new green cars policy. If so, India would be following similar moves by China, which has been aggressively pushing clean vehicle technologies.
But emulating China’s could be tough.
Electric vehicles are expensive due to high battery costs, and car makers say a lack of charging stations in India could make the whole proposition unviable.
The proposed policy focuses on electric vehicles, and is likely to also include plug-in hybrids. But it overlooks conventional hybrid models already sold in India, such as Toyota’s Camry sedan, Honda Motor’s Accord sedan and so-called mild hybrids built by Maruti Suzuki. success