Fuelling change? M&M may consider hybrid tech shift if demand arises

Automaker puts EVs and ICE in the driver's seat amid hybrid emission concerns

Automotive (auto) major Mahindra & Mahindra (M&M), which is all set to launch seven all-electric vehicles (EVs) by 2030, is also open to exploring hybrid technology if there is demand for it.

Speaking after the fourth-quarter earnings of the company, Anish Shah, managing director and chief executive officer of M&M, said that from a demand standpoint, if hybrids are in demand, the company would be ready for that.

“From a demand standpoint, if that becomes a bigger factor, we would be ready for that. We view hybrids as an extension of internal combustion engines (ICE) with a slightly different powertrain. To the extent that is required, we would be ready for that… At this point, we feel good about focusing on small EVs, but we are open to exploring hybrid technology,” he said.

Union Minister Nitin Gadkari has reportedly urged the finance minister to reduce the goods and services tax (GST) on hybrids to 12 per cent. At present, India levies a GST of 28 per cent on ICE vehicles, including hybrids, and 5 per cent on EVs. Players like Toyota, Maruti Suzuki, and Honda Cars have hybrid vehicles in their portfolio.

Recently, Tata Motors Group Chief Financial Officer P B Balaji said that hybrids are used more for tax breaks rather than contributing to zero-carbon emissions. Balaji had said that from a policy standpoint, hybrids are a temporary solution and should not be a central focus for government incentives.

Citing a recent report, Balaji suggested that most people who drive hybrids do so mostly on petrol, negating potential environmental gains.

Shah also expressed the opinion that hybrids don’t bring about a ‘real change’ in emissions.

“Government incentives typically aim to enable the industry to transition to a place that is better for the economy. EVs have no emissions, resulting in a much lower fuel import bill. In that context, governments provide incentives to EVs to facilitate that transition. Over time, the incentives will decrease as they won’t be needed anymore,” Shah told reporters.

He further added, “In hybrids, there is no real change in emissions... Various auto industry experts have talked about it. There is some benefit from the fuel efficiency standpoint, but that is very marginal. It is also more expensive to build as you have two powertrains in the car. This is also the reason why governments around the world have stopped providing incentives to hybrids for almost the past 20 years. The question is, is an incentive required?”

Hybrids caught up with EVs in 2023-24 (FY24), especially in the second half (H2) of the year. In H2FY24, around 52,000 units of hybrids were sold, whereas EV sales are estimated to be around 48,000 or so. However, for the full year, around 100,000 EVs have been sold, while 92,000 units of hybrids have been sold.

M&M is gearing up to introduce its pure-play EV portfolio starting from the first quarter of the 2025 calendar year. It currently sells only the XUV400 as the only EV in its portfolio.

However, the company has said it would not ignore ICE vehicles. It plans to introduce nine ICE sport utility vehicles (SUVs) by 2030.

It has outlined an investment of Rs 27,000 crore for its auto business from 2024-25 through 2026-27 (FY27). Of this, EVs would get Rs 12,000 crore, ICE SUVs would get Rs 8,500 crore, and commercial vehicles would get Rs 4,000 crore.

However, from FY27 onwards, it would assess its spending on ICE depending on how quickly EVs ramp up. M&M targets 20-30 per cent of its portfolio from EVs by 2027.