EVs are the destination, hybrids are transient: Tata Motors Group CFO

Amid growing buzz to incentivise hybrid vehicle technology, Tata Motors Group CFO PB Balaji has dubbed it “a transient technology” and EVs the “destination technology” that needs “viability funding.” Further lending his support to the Indian government’s push for EVs, he called hybrids “nothing more than a CAFE-compliant technology.”

“We’ve always maintained that the investment outlay for the government is limited. Therefore, they are right to support technology that’s more likely to remain permanent, rather than transient technologies,” he said.

This statement from the Tata Motors finance chief comes amid recent feverish lobbying with the government of India to review the GST rates applied on hybrid vehicles, both for and against. Hybrids invite 43 to 50% GST, whereas EVs are imposed with a far lower GST of 5% and an additional benefit through the government’s Production Linked Incentive (PLI) scheme.

Market leader Maruti Suzuki along with its alliance partner Toyota have led from the front to popularise hybrids in the mainstream market. In fact, the top management of the Japanese carmakers — Maruti Suzuki, Toyota and Honda Cars India — have, on multiple occasions, emphasised the benefits of the lower CO2 footprint and higher fuel efficiency of hybrids, which in turn help lower fuel imports.

In 2023, despite the limited options of just four vehicles, the share of hybrid vehicles rose to 1.7 to 2% of the overall market. On the contrary, there are over a dozen variants of EVs in the marketplace, albeit with similar penetration levels.

Further elaborating his point, Balaji explained that the government, as part of its commitment towards a zero emission economy, “needs to be very clear” in terms of where they wish to invest their money.

“Not every technology can draw investment. Hence, they rightly chose what’s likely to be a destination technology, one where there’s likely to be upfront investment from market players.”

Rationalising further, Balaji argued that EVs and hybrids are not to be compared, and that the comparison should be made between diesel vehicles and hybrids instead.

“Today, there’s no subsidy available on petrol, diesel or CNG vehicles, and hybrids are no different from those. This situation needs to be seen in that light,” he said. “It’s more about how you’d want to position EVs and hybrids. We firmly believe that support should be leant towards segments where there’s a viability gap issue, not where entities need support to comply.”

Moreover, Balaji is of the opinion that parties are investing in hybrid vehicles merely to comply with upcoming Corporate Average Fuel Efficiency (CAFE) norms, for if they don’t, they may invite hefty penalties. Calling these new regulations “good enough policy” to ensure that vehicle makers get their fleet emission compliant, he pointed out that it offers incentives in some cases (EVs) and penalties in others (ICE).

“As far as hybrids are concerned, it’s a CAFE-compliant technology and nothing more. OEMs that don’t comply with these CAFE norms will have significant fines coming their way. So companies need to invest keeping CAFE compliance in mind. It’s no different from BS6 Phase 2, where all of us invested to ensure that we were compliant with the standard. That’s where (push-on) hybrids come in,” he elaborated.