India should ‘stay focused’ on promoting EVs: Kia India’s Hardeep Brar | Company

When asked if the government should be lowering taxes on hybrid cars, Brar, in an interview with Business Standard, said, “No. I don’t think we need that because as per the government policy, there has been a huge focus on EVs. So, I think all the OEMs (original equipment manufacturers) have invested heavily in EVs. So, if we try to bring in hybrids at this point of time, I think it will derail all the investments and all the focus going on EVs, which is why I think that we should not get into changing any kind of policies so far as hybrids are concerned. We should stay focused on EVs.”

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 to the debate.

In emphasising the need for a unified approach to push EV sales, Brar remarked, “I think we should be consistent here. 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 in India currently bear a substantial Goods and Services Tax (GST) rate of 28 per cent, which can escalate to over 43 per cent after factoring in additional cess, varying across models. In contrast, electric cars face a much lower tax imposition, with a GST rate of merely 5 per cent.

A total of 90,996 electric cars were sold in India in 2023-24, registering a 91.37 per cent year-on-year (Y-o-Y) growth. Yet, electric cars accounted for only about 2.3 per cent of total car sales in India. In China, their share stands at about 25 per cent.

The Indian government is targeting that by 2030, about 30 per cent of the cars sold in India would be electric. “But the pace of EV sales growth is not that great. So, last year, the share of EVs was about two per cent. It is expected to be about five per cent by 2025. I believe it will be between 15-20 per cent by 2030,” Brar mentioned.

When asked about the continuation of the 5 per cent GST on electric vehicles for the next 5-7 years, his response was unequivocal: “I completely agree because everybody has invested heavily into this. Today, even with the 5 per cent GST rate 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.”

The South Korean company, which sold 255,000 units in India in 2023 without any growth, anticipates a 5-7 per cent surge in 2024, buoyed by the successful relaunches of its SUV models Seltos and Sonet, both of which were in a phase-out situation last year due to their product lifecycle, but are now performing quite well after their updates (facelifts), according to Brar.

While the Sonet facelift was launched in January, the Seltos facelift was introduced in July last year. The company plans an ambitious product offensive, aiming to launch five cars in the next two years. This includes a refreshed Carnival and the EV9, a luxury electric car that won the prestigious World Car of the Year award at the New York Motor Show in March, Brar said.

Moreover, next year will see the unveiling of a ground-up EV, specifically designed for the Indian mass market, marking the brand’s first foray into the mainstream electric segment. The identity of the remaining two models in the five-car lineup remains undecided for now.

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

Brar said that range anxiety— the fear that an electric car’s battery will run out of power before reaching a charging station— the 40-50 per cent higher…