Indian Carmakers Dismiss EV Slowdown Fears After GST Cuts Boost ICE Sales

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AuthorKavya Nair|Published at:
Indian Carmakers Dismiss EV Slowdown Fears After GST Cuts Boost ICE Sales
Overview

Indian auto majors are allaying fears of a slowdown in electric vehicle (EV) adoption, despite a recent surge in petrol and diesel car sales following government GST rate cuts. While cheaper internal combustion engine (ICE) vehicles briefly reduced EV penetration, industry leaders cite short-term volatility, emphasizing that buyers increasingly focus on total ownership costs. EV penetration is projected to continue its upward trend, defying concerns over the tax adjustments.

EV Adoption Rebounds Amidst ICE Tax Cuts

Automakers in India are pushing back against concerns that recent Goods and Services Tax (GST) reductions on traditional petrol and diesel cars could derail the country's electric vehicle (EV) transition. While a festive-season jump in internal combustion engine (ICE) vehicle sales initially caused a dip in EV penetration, industry leaders argue this is mere short-term volatility.

Automakers Reiterate Bullish EV Stance

Federation of Automobile Dealers Association (Fada) data revealed EV penetration dipped from 5.14% in September to 3.26% in October, following GST cuts that narrowed the price gap with ICE vehicles. However, penetration recovered to 3.94% by December. C.S. Vigneshwar, Fada president, stated that EV sales are "here to stay," noting overall penetration grew from 2.5% to nearly 4% last year.

Total Cost of Ownership Drives Long-Term Choice

Executives from Tata Motors and Mahindra & Mahindra remain optimistic about EV growth trajectories. Tata Motors' MD, Shailesh Chandra, pointed to a significant increase in monthly EV industry volumes from around 7,500 units a year ago to 16,000-18,000 units currently. He anticipates ICE vehicle prices will rise due to regulations, while EV costs will decrease, reinforcing the long-term value proposition.

Future Projections Remain Strong

Mahindra & Mahindra's Executive Director Rajesh Jejurikar noted the company hasn't observed any significant recalibration of EV sales post-GST cuts, attributing the ICE surge to pent-up demand. Both companies project substantial EV contributions to their portfolios, with Mahindra forecasting up to 20-25% of sales from EVs and Tata Motors aiming for 15-20% industry penetration by 2030. Experts like Anurag Singh of Primus Partners agree that Indian consumers are increasingly TCO-driven, factoring in fuel savings and maintenance, suggesting the EV value proposition continues to strengthen.

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