Luxury car buyers in India speed up shift to EVs, outpacing mass market

Mass-market EV sales dropped 10% year-on-year in August, but the luxury segment is seeing strong demand, with premium carmakers reporting a solid order pipeline

Luxury car buyers in India are adopting fully electric vehicles at a quicker rate than mass-market consumers, driving manufacturers to expand their EV offerings, according to a report by The Economic Times (ET).

While sales of mass-market electric cars have slowed down, dropping 10 per cent year-on-year to 6,335 units in August after an initial surge, the luxury segment is experiencing a contrasting trend. Premium carmakers report a strong order pipeline and are making significant efforts to meet rising demand.

Mercedes-Benz recently revealed plans for the launch of the EQG, an electric version of its iconic G-Wagon. Although this model is expected to hit the Indian market in late 2024 or early 2025, interest is already high, with 80 orders placed for the Rs 3.5 crore vehicle.

Despite starting from a smaller base, the company’s EV sales contribution doubled to 5 per cent of total sales in the first half of 2024 compared to the same period last year.

BMW Group India, leading the luxury EV segment with models like the i7, iX, i5, and Cooper SE, surpassed 2,000 electric vehicle sales in the first six months of 2024. Electric vehicles accounted for 6 per cent of its total sales during this time.

The report quoted Santosh Iyer, managing director and CEO at Mercedes-Benz, as saying, "Clearly, the consumers in the top end of the market are able to make the shift to electric a lot faster than the mass market as they are ready to take that leap of faith."

On Thursday, Mercedes unveiled the electric version of its luxury Maybach line, the EQS680 SUV, priced at Rs 2.25 crore (ex-showroom). This marks the brand's fifth electric vehicle in India and comes at a lower price than its petrol-powered counterpart, the Maybach GLS, which retails at Rs 3.7 crore (on-road). Many Mercedes customers see switching to electric, with its green number plate, as a social statement, making the electrification of this model a significant step, Iyer added.

India is a key market for Maybach, ranking among its top 10 globally and experiencing rapid growth. Since its introduction in 2016, Mercedes has sold 1,500 units in the country, with the majority sold post-pandemic.

"A lower GST of 5 per cent on EVs compared to 43 per cent on internal combustion engine (ICE)-powered models and exemption from road taxes on EVs in certain cities has allowed manufacturers like us to price EV models on par or cheaper than ICE models," Iyer told ET.