Hybrid vs EVs: The Battle for Sustainable Transport Dominance

With climate change and global warming taking precedence in discussions, there is an increased focus on decarbonising the transport sector and moving towards cleaner fuels. A fierce competition is underway between hybrid and electric vehicles (EVs) to lead the sustainable mobility revolution.

While electric vehicles currently dominate the alternative fuels market, recent data shows a resurgence of hybrids, challenging the dominance of EVs.

Let’s explore the rivalry between hybrids and EVs and the factors contributing to their sudden rise.

What’s Happening?

In the last few months, hybrid car sales have surged. In 2023, 83,000 hybrid cars were sold, a 361.66% increase from the 18,000 units sold in 2022. In contrast, EV sales increased by only 50% over the same period.

Hybrid car sales in India in the third and fourth quarters of 2023 surpassed those of EVs. This trend continued in the January-March quarter of 2024.

Hybrid cars are taxed at 43% (28% GST and 15% cess), compared to only 5% GST on EVs. Major automakers have demanded reduced GST on hybrids. Consequently, the Union Heavy Industries Ministry has formed a committee to assess whether taxes on hybrid cars should be lowered.

Why Hybrid Vehicles Have Seen a Resurgence?

The rise of hybrids is largely due to issues associated with EVs. One major factor is the lack of comprehensive charging infrastructure. Currently, there are only 12,000 public charging stations in India, far short of the target of 1 million by 2030.

Another concern is range anxiety. The mileage marketed by car companies has not met public expectations. Additionally, lithium-ion batteries have a limited shelf life of 6-8 years, and replacing them is costly. Hybrid cars, with dual internal combustion engines (ICE) and electric motors, are more cost-effective.

The above sales data highlights the growing competition between hybrid and electric vehicles.

What’s in it for Investors?

The hybrid car market is dominated by traditional automakers like Toyota, Hyundai, and KIA. These companies have launched exciting models in the hybrid segment. Industry experts predict that hybrid car sales could surpass EV sales in FY 2025.

According to the Deloitte 2024 Global Automotive Consumer Study, consumer preference for hybrid electric cars increased in 2024 compared to 2023. This indicates exciting times for the industry as more carmakers enter the hybrid segment.

What’s Next?

With improved performance, there is growing demand among car companies to reduce the tax disparity between hybrids and EVs. Companies are urging the government to eliminate the 15% cess on hybrid cars to make them more competitive.

Government policies and tax structures will ultimately determine whether hybrid cars can sustain their remarkable sales growth.

That’s it for today. We hope you’ve found this article informative. Remember to spread the word among your friends. Until we meet again, stay curious!

This article is for informational purposes only. This is not investment advice. Disclaimer: Teji Mandi Disclaimer