No such thing as EVs vs hybrids, both sister tech: Toyota EVP Gulati

Development of more hybrid cars to assist in lowering EV development costs

There is no such thing as electric vehicles (EVs) versus hybrid vehicles, and the development of more strong hybrid vehicles will assist in developing the auto component ecosystem, ultimately lowering the costs of developing EVs, Vikram Gulati, Country Head and Executive Vice-President (Corporate Affairs), Toyota Kirloskar Motor (TKM), has told Business Standard.

Over the past three quarters, the sales of strong hybrid cars in India have shown a consistent upward trend compared to electric cars.

In the June quarter of 2023, 14,399 strong hybrids and 25,186 electric cars were sold in the country. Moving to the September quarter, strong hybrids witnessed a surge in sales, reaching 22,023 units, while electric car sales declined to 23,945 units. In the December quarter, sales of strong hybrid cars in India reached 24,250 units, surpassing those of electric cars at 19,869 units for the first time in any period.

"It is not about hybrid versus EVs. Both are sister technologies that are complementary to each other and are aimed in the same direction where society wants to move. Whether it is shifting away from fossil fuels, lowering carbon emissions, reducing local pollution, etc. -- both the technologies contribute towards that," Gulati stated.

According to government studies, a strong hybrid is practically half an EV because it runs 40 per cent of the distance and 60 per cent of the time in the EV mode, he noted. "So, there is no such thing as EV versus hybrid. I think it is EV and hybrid versus the traditional technologies of gasoline and other fossil fuels," he added.

The market share of strong hybrid cars in India surged from 0.5 per cent in 2022 to about two per cent in 2023. On the other hand, the market share of electric cars increased from two per cent in 2022 to about 2.2 per cent in 2023. TKM is the leading player in the strong hybrid car market in India. It sells hybrid variants in the Hyryder, Innova Hycross, and Camry models.

On the aforementioned sales trend, he first noted that rising hybrid car sales in one or two quarters cannot be considered indicative either way. "Second, we are at nascent stages of electrification. When I say electrification, I mean both electric cars and hybrids. Hybrids have come in relatively mass segments only a year or so ago in the real sense. Also, electric cars' journey in India began only in 2020," he added.

Meanwhile, the shares of EVs and strong hybrids are themselves quite small in India. "I think the challenge for us today is how do we work together to rapidly shift towards greener technologies. It need not be just electric and hybrid. It could be ethanol-based vehicles," Gulati mentioned.

Atul Sood, Vice President (Sales and Strategic Marketing), TKM, said the aforementioned sales trend has been for a "very short term". He added, "Just one or two quarters do not give us the indication for the future. The overall journey is towards electrification. There is no doubt about it. Strong hybrids are also an integral part of that electrification."

The company is riding high after recording a 38 per cent annual growth in domestic sales in 2023, reaching 221,356 units.

The turnaround of the Indian subsidiary of the Japanese carmaker shows that in addition to the cost optimization initiatives at TKM and the increase in the average selling price of its models, the five-year-old global alliance between Toyota Motor Corp (TMC) and Suzuki Motor Corp (SMC) has started paying off. It involves sharing and cross badging of models and technologies between TKM and Maruti Suzuki India.

Gulati said that the company's strategy of selling more hybrid cars is aiding in building an ecosystem of auto component makers for hybrid cars as well as electric cars.

"For every hybrid car that I sell, I am selling an electric powertrain (which is in that hybrid car). This also drives up the volumes of engines, motors, batteries, etc., that are common across both technologies... This will increase the pace of investment and localisation and thereby, the cost of parts will decrease and hence, the cost of both technologies will decrease. I think the cost factor is going to be critical going forward," he noted.

"As of now, the government has done a tremendous job with the kind of subsidy and low GST that has been given to electric cars. They have been instrumental in pushing up the demand for these EVs. But going forward, the industry has to become self-sustaining and for that, both hybrids and electrics, working together, are needed to create that ecosystem (of localisation)," he added. While EVs are taxed at just five per cent, hybrid cars are cumulatively taxed at 43 per cent in India.

Sood said that the company's approach is to satisfy the needs of all types of customers and it will continually work on that. "We will work towards multi-path technology and diesel will be an integral portion at this stage," he noted.

Road Transport and Highways Minister Nitin Gadkari had on September 12 last year stated that the automobile industry must reduce the production of high carbon-emitting diesel vehicles, or else the government may consider imposing an additional 10 per cent goods and services tax (GST). As major auto stocks tumbled in reaction, he clarified about an hour later that no such proposal was under the government's consideration. Mahindra & Mahindra, Hyundai, Tata Motors, TKM, and Kia are major players in the diesel car market.

Gulati told the newspaper that with the implementation of BS-6 emission norms, there have been investments by the auto industry as well as the fuel industry, and the car companies in India are now in a good place. "We are at par in terms of emissions with Europe. As a result, diesel is no longer a dirty fuel. After BS-6, the emission levels (PM2.5 emissions) are more or less the same for all fuels (diesel, petrol, etc.). So that is the first point that we need to look at. Why did diesel get a bad name? That was due to emissions and that no longer holds true," he explained.

Due to the "overwhelming" response from customers to its products, the company has been running its existing two plants at Bidadi in Karnataka at full capacity. TKM recently announced that it is going to establish a third plant near its two existing plants. "We have been operating with the capacity of 345,000 units. This includes the 30 per cent increase (of about 30,000 units per year) in capacity due to the introduction of the third shift in plant 1. The new plant that is coming is on the same campus. It will be built with a capex of about Rs 3,300 crore and have 100,000 units per annum capacity. This will ramp up our capacity to about 445,000 units per year," Gulati explained.