Two Indian major electric car companies, Tata Motors and Mahindra, are attempting to prevent the government's fleets of vehicles in India from including hybrid cars. The two automakers have argued that a pollution management organization's effort to encourage hybrid automobiles in the government fleets in and around New Delhi would harm investments and impede the rate at which cleaner battery electric vehicles are adopted. The ministry has also received letters in support of electric vehicles from other OEMs, including JSW MG Motor, Hyundai, and Kia, reviving their rivalry with hybrid supporters like Toyota and Maruti Suzuki.

According to Reuters, the two Indian carmakers have been pushing the Ministry of Heavy Industries (MHI) to reverse a move to treat hybrid and electric vehicle as comparable and to limit incentives across all government initiatives to electric vehicles. According to the report, the two vehicle firms have written MHI at least five letters about this issue. Interestingly, both of these two car manufacturers have been focusing on electric cars, whereas numerous other manufacturers, including Maruti Suzuki and Toyota, have been highlighting the necessity for a diverse clean energy technology that includes hybrids and pure EVs.

Why did Tata, Mahindra, Hyundai, Kia, and MG advocate against hybrids?

The Commission for Air Quality Management (CAQM), the agency responsible for addressing severe air pollution levels in India's capital region, stunned car manufacturers in May by classifying potent hybrids as cleaner vehicles and suggesting their use in government fleets. In light of the extremely high volume of vehicular traffic in New Delhi and its surrounding areas, the commission stated that there is a necessity to shift away from polluting vehicles that are solely reliant on fossil fuels such as gasoline and diesel.

But automakers contend that electric cars are entirely dependent on battery power and generate no tailpipe emissions, making them a viable solution to the urban air pollution problem. In contrast, hybrids, which combine an internal combustion engine and a battery, are still dependent on fossil fuels. The news agency reported that Mahindra's letter to the heavy industries ministry on May 15 stated, "Our plea is for government policy and incentives to stay firmly focused only on EVs."

The potential opportunity is enormous, given that just 5,384 of the 847,544 government fleet automobiles in India in 2022 were electric vehicles, or less than 1%. A significant issue for electric vehicle producers is that public support for hybrids dilutes the Indian government's own policy, which only promotes EVs in its production-linked (PLI) plans and other initiatives.

In addition, it asserted that this would cause confusion among consumers, businesses, and investors in the automobile industry, which would negatively impact EV sales at a time when the sector is already experiencing challenges due to expensive upfront vehicle costs and insufficient charging infrastructure. Tata Motors reportedly said in its letter that "the lack of a consistent and predictable policy environment may deter long-term investors ... particularly in high-capex, technology-intensive sectors like EV." It's interesting that Tata has secured $1 billion in funding from the private equity company TPG for its EV initiative.

The commission's action will have an impact on India's reputation as an investor-friendly location on the world stage, send mixed signals to foreign stakeholders, and harm existing and potential EV investments, Tata stated in its letter dated May 15.

According to a Moody's ratings agency study, this action occurs at a period when Indian automakers are predicted to invest more than $10 billion between 2030 in the production of lithium-ion cells, electric vehicles, and batteries. The report also notes that India's adoption rate of electric vehicles is still behind that of China, Europe, and the United States.

Read Also: Critical Component Delay from China Could Stall Indian EV Industry, Warns Bajaj Auto

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