EV makers Tata, Mahindra, Kia, Hyundai, MG seek to block hybrids in govt fleets, documents reveal

Tata Motors and Mahindra, two homegrown major electric car manufacturers, seek to block hybrid cars in the government's vehicle fleets in India. The two car manufacturers have been seeking to block a pollution management body's attempt to promote hybrid vehicles in the government fleets in and around New Delhi, claiming that it will disrupt the pace of adoption of cleaner battery electric cars and hit investments. Not only these two but other OEMs like JSW MG Motor, Hyundai and Kia have also written to the ministry in support of electric cars, rekindling their face-off with hybrid proponents like Toyota and Maruti Suzuki.

Reuters has reported that the two Indian car manufacturers have been lobbying the Ministry of Heavy Industries (MHI) to overturn an attempt to equate hybrid with electric vehicles and ensure incentives for all government programmes are restricted to electric vehicles. The report claims that the two auto companies have sent at least five letters to MHI regarding this. Interestingly, both of these two carmakers have been emphasising on electric vehicles, while many automakers such as Maruti Suzuki, Toyota have been emphasising the need for a diversified clean energy technology, focusing on hybrids alongside pure EVs.

What prompted Tata, Mahindra, Hyundai, Kia and MG to lobby against hybrids?

In a May 2 advisory, the Commission for Air Quality Management (CAQM), tasked with fixing severe air pollution levels in India's capital region, categorised strong hybrids as cleaner vehicles, recommending their use in government fleets, a move that caught car manufacturers by surprise. The commission said that given the ultra-high density of vehicular traffic in New Delhi and nearby areas, there is a need to move away from polluting vehicles, dependent purely on fossil fuels like diesel and petrol.

Automakers, however, argue that hybrids, which use a battery and an internal combustion engine, are still reliant on fossil fuels, whereas electric vehicles are solely dependent on battery energy and produce zero tailpipe emissions, which makes them an effective solution for the urban air pollution crisis. "Our plea is for government policy and incentives to stay firmly focused only on EVs," Mahindra said in its May 15 letter to the heavy industries ministry, reported the news agency.

The potential opportunity is huge, considering that of the 847,544 government fleet vehicles across India in 2022, only 5,384 were EVs, which was less than one per cent. A major concern for automakers manufacturing electric cars is that support for hybrids dilutes the Indian government's own policy, which incentivises only EVs in its production-linked (PLI) schemes and other programmes as well.

This also claimed to create confusion among car buyers, companies and investors, hurting EV sales at a time when their growth is already facing difficulties due to inadequate charging infrastructure and high upfront vehicle costs. "The lack of a consistent and predictable policy environment may deter long-term investors ... particularly in high-capex, technology-intensive sectors like EV," Tata Motors reportedly stated in its letter. Interestingly, Tata has raised $1 billion from private equity firm TPG for its EV push.

Tata, in its May 15 letter, said that the commission's move will undermine current and proposed EV investments, impact India's global image as an investor-friendly destination and send mixed signals to international stakeholders.

This move comes at a time when carmakers in India are expected to invest over $10 billion through 2030 to manufacture lithium-ion cells, EVs and batteries, ratings agency Moody's said in a report, adding EV adoption rates in India are still low versus China, Europe and the US.

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