Mercedes-Benz India has welcomed Delhi's proposed Electric Vehicle Policy but has questioned the decision to impose additional taxes on premium electric vehicles priced above ₹30 lakh, arguing that it runs counter to the broader objective of decarbonising road transport.
Mercedes-Benz India Managing Director and CEO Santosh Iyer said the company supports the policy's overall direction but disagrees with the treatment of higher-priced EVs.
"I think directionally the policy is a right setup to encourage EVs and to decarbonize the sector. So it's fully welcome," Santosh Iyer, Mercedes-Benz India Managing Director and CEO told Autocar Professional. However, he said the ₹30 lakh price cap creates an unnecessary distinction when the objective is to reduce emissions.
The draft Delhi EV Policy seeks to accelerate EV adoption through a mix of incentives and disincentives, including differential taxation based on vehicle price. While the policy aims to increase electric vehicle penetration across segments, luxury automakers believe the price threshold could discourage customers from choosing electric models over internal combustion engine (ICE) vehicles.
"What we were not as happy was the price cap that is kept on the 30 lakhs, wherein above that, there is a certain level of taxation for luxury cars like us," he said.
According to Iyer, emissions are independent of a vehicle's price point and therefore policy measures should encourage EV adoption across the board. "I think that if the goal is to decarbonize, every car on the road will have the same emission impact. So there we see a bit of a challenge in understanding. If the goal was to decarbonize the sector, then there should not be any price caps," he said.
He also warned that making electric vehicles more expensive than comparable ICE models could inadvertently push customers back towards conventional powertrains. "Fundamentally, I'm a big believer that the choice of powertrain is a TCO decision, which means that if the combustion engine car on-road price and the EV on-road price is the same, the consumer may shift to EV because EV has lower running cost," he adds.
But with differential taxation, Iyer believes that equation changes. "But now with a distortion, if the combustion engine is cheaper than an EV, our consumers will also tend to purchase a combustion engine car because that's more economically viable and that we have seen across categories and across segments," he said.
Mercedes-Benz has been expanding its electric vehicle portfolio in India, with EV penetration within its sales mix reaching 14% in the second quarter of 2026, up from around 7-8% earlier, helped by the launch of the new CLA EV.