You’ve surely heard about the Volvo XC90 Excellence plug-in hybrid, haven’t you? It is powered by a 2.0-litre petrol engine and an electric motor. This Volvo plug-in hybrid can be driven for over 20km without consuming a drop of fuel. The batteries are rechargeable, and when they go dry, the SUV runs on petrol. It costs Rs 1.275 cr in India. The Volvo XC90 is also available with a diesel engine, and that costs Rs 95 lakh. If the plug-in hybrid version was taxed at 10 per cent instead of 43 per cent (as both diesel and hybrid in the existing case), the price difference between the diesel and the hybrid XC90 would come down to around Rs 3 lakh, the hybrid still being the more expensive of the duo. The hybrid XC90’s sales are about 5 per cent of the total sales of the XC90 model in India, and the biggest deterrent has to be the over-Rs 30 lakh price difference.
The GST Council recently came up with the novel idea of taxing hybrid vehicles at par with their fossil fuel-powered counterparts. Having been slammed for doing so, their proposed way out of this situation is not lowering the tax rate on hybrids but increasing the levy on petrol-diesel vehicles instead (read in detail about the new suggestions from GST Council here). The sad part of the story is the absurd reason for not incentivising hybrid cars – ‘hybrids save only small part of fuel’.
“Government is not much interested in promoting Hybrid cars as they save only small part of fuel” - Mr Piyush Goyal, Minister of State for Power, Coal, New and Renewable Energy and Mines
Now that GST for India is not revolving around the ‘One Nation, One Tax’ formula, should the government consider employing someone in the know to segregate hybrid cars and come up with a lower tax rate for plug-ins?
Passed as diesel hybrid - Maruti Suzuki Ciaz SHVS
Hybrid vehicles can be segmented into plug-in, petrol and diesel hybrids. Since plug-in hybrid vehicles are more closely related to electrics (because after externally charging their batteries, these vehicles can run on pure electric mode), they can fall into the 18 per cent category, which leaves the government with room to keep the electric vehicles at 12 per cent.
