Hyundai is taking a U-turn on hybrid vehicle plans and is speeding up bringing an electric car to India, its third-biggest market after China and the US. The country’s second-biggest carmaker plans to showcase an electric sports utility vehicle (SUV) in the Auto Expo in next February, followed by a launch.
“We had hybrid plans. Now we have to choose between hybrid and electric vehicles in line with the government’s preference. Globally, we have technology for both hybrid and electric. But electric now seems to be a better choice for India. We have requested our headquarters to give us an electric vehicle to showcase during the next Expo and get feedback,” Y K Koo, managing director and chief executive officer at Hyundai Motor India, told Business Standard.
The Korean carmaker’s decision to review hybrid plans comes after the Goods and Services Tax (GST) Council decided to tax hybrid cars at the highest rate of 28 per cent and also impose a 15 per cent cess on such vehicles. The combined rate of 43 per cent is similar to the tax imposed on luxury cars. In comparison, electric vehicles have been taxed at a much lower rate of 12 per cent under the goods and services tax.
Hyundai had planned to showcase the Ioniq Hybrid car at the Expo. This would have been the company’s first hybrid car in India. Koo said the model the company now plans to bring for the Expo is an electric SUV, smaller than the Creta. “It is a small SUV with a new design. It will be launched at Geneva Motor Show in March 2018. We don’t hope to sell large volume (in India) but it will help us test the market,” he said.
Hyundai plans to import completely-knocked-down (CKD) units of this SUV and assemble it locally (a model that Tesla is likely to follow for the Indian market). This means a CKD unit will attract import duties of approximately 60 per cent, against the 125 per cent duty completely-built units attract.
Koo said the government and the private sector have set up a few hundred charging stations in select cities already.
“The government will put more effort there. We will sell in metro markets where charging stations are available. Some people will opt for it. India is a very important market and we will bring eco-friendly products.”
But Koo does not want to stop at CKD level. “Once the market matures, we will start local production of electric vehicles,” he said.
The decision to tax hybrids at 43 per cent has impacted demand and hit sales of such cars produced by players such as Maruti Suzuki and Toyota.
Maruti Suzuki, the country’s biggest carmaker, has not yet unveiled its electric vehicle strategy. The government is, however, talking about an all-electric car fleet by 2030. Kenichi Ayukawa, managing director and chief executive officer of Maruti Suzuki, said last month that there is lack of affordable electric vehicle solutions and that people wanted such cars at a price range of ~5-10 lakh. “We have to review these practical problems. We need a road map for the future,” he had said.
Homegrown auto major Mahindra and Mahindra is the only company producing electric cars locally, though volumes are small.