Tata Motors Opposes Tax Cuts on Hybrids, Stresses Pollution Concerns Over EV Incentives

18 Jan 2024 , 01:53 PM

Tata Motors, India’s leading electric car manufacturer, is urging the government against tax cuts on hybrid cars, arguing that they are more polluting than pure electric vehicles (EVs).

The Indian government, under Prime Minister Narendra Modi’s initiative to reduce pollution, taxes EVs at a low 5%, while hybrid cars face a higher levy of up to 43%, just below the 48% imposed on petrol cars.

Toyota, a prominent advocate for hybrids, has been lobbying for lower taxes on them, emphasizing their role in reducing carbon emissions compared to traditional gasoline cars.

In response, Tata Motors has engaged with officials and communicated with India’s trade department, emphasizing the country’s urban air quality crisis and health implications. Tata contends that hybrids should not be further incentivized as they already enjoy lower taxation compared to petrol cars.

Tata Motors, in a confidential letter seen by Reuters, stated that any additional incentivization of hybrids would be counterproductive to climate goals and the nation’s economy.

This lobbying effort aligns with Tata’s broader strategy to protect its dominant market share in the electric vehicle sector, including pushing back against Tesla’s attempts to secure lower levies for imported EVs.

India’s trade department, responding to calls for tax rationalization on hybrids, has not provided official comments on the matter.

Rivals in the Indian market, including Mahindra & Mahindra and Hyundai Motor, have also expressed support for maintaining the current tax policy, discouraging reductions for hybrid vehicles.

Tata Motors emphasizes regular communication with the government, stating that EVs are the practical solution to combat India’s urban air pollution and reduce oil imports.

Mahindra’s Managing Director, Anish Shah, advocates for a level playing field between domestic and foreign EV players and emphasizes the promotion of local manufacturing in the electric vehicle industry.

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