India should stay focused on promoting EVs: Kia's Hardeep Singh Brar

It is not just the Centre. During the last several months, certain state governments like Telangana and Karnataka have decided to reintroduce road taxes on EVs, adding another layer of complexity

The Central and state governments should “stay focused” on promoting electric vehicles (EVs) since the nascent industry’s growth rate is “not great” and requires support in the form of low taxes for the next fiveseven years, Hardeep Singh Brar, senior vice-president and national head of sales & marketing, Kia India, told Busines Standard in an interview.

A total of 90,996 electric cars were sold in India in the financial year ended March 31, 2024, up 91 per cent year-on-year (Y-o-Y). Yet, electric cars accounted for only 2.3 per cent of total car sales. In neighbouring China, the share of EVs stood at about 25 per cent.

Hybrids vs EVs
 

As India aims to be carbon neutral by 2070, automakers are divided over the best path ahead. Japanese giants like Maruti Suzuki and Toyota are pushing for tax cuts on hybrids, arguing EVs alone can’t carry the emissions reduction load. But homegrown players like Tata Motors insist that only a full-throttle push for EVs can decarbonise India’s roads. The Central government is considering the Japanese companies’ proposal.
 

When asked if the government should lower tax on hybrid cars, Brar replied in the negative.

“According to the government policy, there has been a huge focus on EVs. All the OEMs (original equipment manufacturers) have invested heavily in EVs. If we try to bring in hybrids at this point, it will derail all investments,” he said.
 

“We should not get into changing any policies so far as hybrids are concerned. We should stay focused on EVs,” Brar added.

During the last few months, state governments like Telangana and Karnataka decided to reintroduce road taxes on EVs. In emphasising the need for a unified approach to push EV sales, Brar said that consistency was the need of the hour.

“Many state governments are withdrawing the benefits. Earlier, there were zero taxes in terms of road taxes and registration. Now, many states have already raised them to the level of an internal combustion engine (ICE) car. This is one of the factors behind the increase in on-road prices of EVs in the recent past. Hence, it is impacting the demand.”
 

Hybrid cars currently bear 28 per cent goods and services tax (GST) in the country, which rises to over 43 per cent after factoring in additional cess depending on the model.

In contrast, electric cars attract 5 per cent GST. The Indian government is targeting to have about 30 per cent cars sold in India by 2030 to be electric.

"But the pace of EV sales growth is not that great. Last year, the share of EVs was about 2 per cent. It is expected to be about 5 per cent by 2025. I believe it will be between 15 and 20 per cent by 2030," Brar said.

Lower for longer
 

Brar said he supported continuing 5 per cent GST on electric vehicles for the next five-seven years.

“Everybody has invested heavily into this (EVs). Today, even with the 5 per cent GST on EVs, the demand is not great. EVs are still 40-50 per cent more expensive than equivalent ICE vehicles. So, imagine if the tax rates go back to normal. The price gap between ICE cars and EVs will increase, and we will go back to square one,” Brar said.
 

Currently, the sole electric car sold by Kia in India is the EV6, which commands a premium price point, starting at Rs 60.96 lakh ex-showroom.
 

The South Korean company, which sold 255,000 units in India in 2023 without any growth, expects 5-7 per cent growth in 2024, buoyed by the successful relaunches of SUV models Seltos and Sonet.