Delhi Draft EV Policy Splits Auto Industry Vertically

Major automobile players are vertically split on the proposed equalisation of incentives for hybrid vehicles with fully electric vehicles (EVs), sparking an intense debate.

The draft proposal floated the idea of providing a road tax and registration fee waivers for "strong" hybrids and "plug-in" hybrids, similar to some of the existing benefits given exclusively to EVs.

This waiver is ostensibly a result of “acknowledging their (strong and plug-in hybrid EVs) contribution to reducing vehicular emissions and supporting cleaner mobility”, according to the draft.

Treating Hybrid Cars At Par With EVs Creates Uproar

Said Gyan Sharma, well-known auto industry expert, “If implemented, this may lead to savings of around Rs 2 lakh on a hybrid car with an ex-factory price of Rs 20 lakh.”

Last year in July, the Uttar Pradesh government announced exactly the same waivers for strong and plug-in hybrids. If Delhi follows suit, domestic automakers are apprehensive that other states will also start incentivising hybrid cars in a bandwagon effect.

However, most of the domestic automakers have already committed a huge amount of investments into battery electric vehicle (BEV) technology. Their roadmap, synchronised with India’s 2070 net-zero commitment, never included hybrid automobiles.

This set of automakers includes Tata Motors, Mahindra & Mahindra, and Hyundai India. They are heavily invested in BEVs, and till now, nowhere near hybrid car production. No wonder these companies are pressing for exclusive incentivisation of EVs.

The other part of the vertically split industry has Maruti Suzuki and Toyota Motor, with parental linkage in the Japanese auto industry. These are companies way behind the other set in developing BEV, but masters of hybrid technology. Naturally, they want government support for hybrid vehicles.

So, the clash was inevitable, and it is out in the open now, triggered by the Delhi draft EV policy.

Rest Of India May Follow Delhi In EV Policymaking

A top executive in a domestic auto company, on condition of anonymity, said, “Being the capital of the country, Delhi sends the signal to the rest of the country. Other states will follow. If hybrids are treated at par with BEVs in Delhi, the same policy will be adopted everywhere else”.

“BEV investment will definitely suffer, and that will not be good for the country’s sustainability and green transition agenda,” he added.

For further clarity on the issue, regular hybrid cars are not plugged in and charged, unlike plug-in hybrid electric vehicles (PHEVs). These are run by a petrol or diesel engine, and an electric motor. That electric motor is powered by a battery, which gets charged by the petrol engine (when running) and the regenerative braking process.

The regenerative braking system captures the kinetic energy when the car is slowing down (after applying brakes), converts that energy into electricity, and finally uses that electricity to recharge the vehicle’s battery.

PHEVs, on the other hand, are also powered by a petrol or diesel engine, and an electric motor, but with a larger battery that can be charged using an external power source.

One may ask here: Then how are hybrid cars better than simple fuel-based ICE (internal combustion engine) driven cars?

The presence of the battery reduces emissions in a hybrid car, compared to a conventional car. But of course, any type of hybrid car can never be a zero-emission vehicle.

Precisely for this reason, BEV makers are opposing incentives proposed for the various types of hybrid cars, which also use fossil fuels.

On the other side, hybrid makers feel that with little progress on charging infrastructure, the battery EV industry is in for a long haul. In the interim period, hybrids can provide partial relief from emissions on the road. It follows a “something is better than nothing” logic.

Delhi government officials said they will weigh the various arguments being advanced by car-makers and consult experts before taking a call. "We understand that once the policy kicks in, it can change the way car sales happen here," said officials.

In 2023 alone, Delhi registered a record 6.5 lakh vehicles, including 1.9 lakh cars. This included 4 lakh two-wheelers, 19,849 goods carriers, 17,545 e-rickshaws and 73,447 EVs. 

Industry watchers and sustainability enthusiasts will be keenly observing which side the Delhi government policy balance will finally tilt.