Indian EV Makers Push Back Against Hybrid Vehicle Inclusion in Government Fleets: Reuters

Leading Indian automobile manufacturers are actively opposing efforts by a pollution control authority to include hybrid vehicles alongside electric cars in government fleet recommendations for the Delhi region, according to internal documents accessed by Reuters.

Major automakers including Mahindra & Mahindra and Tata Motors have submitted formal appeals to India's heavy industries ministry, urging officials to reverse a recent decision that would treat hybrid vehicles similarly to fully electric vehicles in government procurement policies, Reuters reported based on five company correspondence documents.

The controversy stems from a May 2 recommendation issued by the Commission for Air Quality Management, the body responsible for addressing Delhi's severe air pollution challenges. This commission designated strong hybrid vehicles as "cleaner vehicles" and recommended their adoption in government vehicle fleets—a classification that surprised the automotive industry.

The air quality commission justified its position by citing the "ultra-high density" of vehicle traffic in New Delhi and surrounding areas, emphasizing the urgent need to transition away from vehicles that rely entirely on fossil fuels such as diesel and gasoline.

Electric vehicle manufacturers are presenting a clear distinction between their products and hybrid alternatives. They contend that hybrid vehicles, which combine battery power with internal combustion engines, still depend on fossil fuel consumption, while battery electric vehicles generate zero emissions at the point of use—making them more effective for addressing urban air quality concerns.

"Our plea is for government policy and incentives to stay firmly focused only on EVs," Mahindra stated in its May 15 correspondence to the heavy industries ministry, as reported by Reuters.

The coalition opposing hybrid inclusion extends beyond Mahindra and Tata to include JSW MG Motor, Hyundai Motor, and Kia Corp, all advocating for electric vehicle exclusivity. This positions them against hybrid-supporting manufacturers such as Toyota Motor and Maruti Suzuki, reigniting industry divisions over clean vehicle technology approaches.

Reuters noted that requests for comment sent to Tata, Mahindra, JSW MG Motor, Hyundai, Kia Corp, and the heavy industries ministry went unanswered.

The potential market represents a significant opportunity for vehicle manufacturers. Government data cited by Reuters shows that of 847,544 vehicles operated by government agencies throughout India in 2022, only 5,384 were electric vehicles—representing less than one percent of the total fleet.

Electric vehicle manufacturers express worry that government support for hybrid vehicles could undermine India's existing policy framework, which currently provides incentives exclusively for electric vehicles through production-linked schemes and other government programs.

Companies argue that including hybrids in government support could create market confusion among consumers, businesses, and investors, potentially dampening electric vehicle sales at a time when growth is already facing challenges from insufficient charging infrastructure and high initial purchase costs.

Tata Motors, which has secured $1 billion in funding from private equity firm TPG for its electric vehicle initiatives, warned in its May 15 letter that inconsistent policy direction could discourage long-term investment, particularly in sectors requiring substantial capital investment and advanced technology development like electric vehicles.

According to Reuters' reporting, Tata expressed concerns that the commission's hybrid inclusion decision could compromise current and planned electric vehicle investments, damage India's reputation as an investment-friendly destination, and create conflicting messages for international partners and stakeholders.

The financial stakes are substantial. Ratings agency Moody's projects that Indian automakers will invest more than $10 billion through 2030 in manufacturing lithium-ion batteries, electric vehicles, and related components, though the report notes that India's electric vehicle adoption rates remain significantly lower than those in China, Europe, and the United States.

The electric vehicle push has attracted significant international investment. Mahindra's electric vehicle division has received backing from Singapore's Temasek sovereign wealth fund and British International Investment, while Hyundai has announced plans to invest over $500 million in electric vehicle development in India.