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Mahindra, Nissan, Toyota and other carmakers scramble to build electric cars to make the most of tax sops

MNCs such as Volkswagen, Toyota, Honda and Nissan are planning to focus on more expensive pure hybrids and electric vehicles.

Sep 01, 2016, 03.50 AM IST
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MUMBAI: Automakers big and small are racing to build hybrids and electric cars to take advantage of tax benefits and increasing concerns on air quality in major cities.

A dozen electric and hybrid cars are likely to be launched in the next three years with Mahindra & Mahindra (M&M), Hyundai, Toyota and Nissan joining market leader Maruti Suzuki in adopting this technology.

M&M is currently working on XUV mild hybrid, which will be launched in the next 6-12 months. It is alternatively working on four-door versions E2O and KUV electric. Likewise Hyundai’s mid-size sedan Verna will get a soft hybrid next year and is exploring the same technology for the upcoming Tucson SUV.

Other multinational companies such as Volkswagen, Toyota, Honda and Nissan are planning to focus on more expensive pure hybrids and electric vehicles.

These carmakers will be launching pure hybrids in the higher segments where price tag is not an issue.



Guillaume Sicard, president of Nissan Motor India, said his company may introduce mild hybrids but wants a consistent policy.

"We are strongly contemplating bringing in the Leaf electric small car to India. And apart from electric Leaf, the pure hybrid technology is also more suitable in premium vehicles like X Trail, as an additional Rs 4-5 lakh on Rs 30 lakh SUV won't pinch the buyer in that segment. For us the electric and hybrid cars will play the role of brand building further," said Sicard.

The government offers lower excise duty on electric and hybrid cars under Faster Adoption of Manufacturing of (Hybrid &) Electric Vehicles (FAME), which is part of National Electric Mobility Mission Plan.

Maruti’s play
Maruti Suzuki already has a significant share of the hybrid market through its mild hybrid technology. The firm also gets decent tax benefits with 12.5 per cent excise duty on all electric-cum-hybrid cars compared with 24-27 per cent for normal sedans.

Its mild hybrid uses integrator starter generator (ISG), which conserves energy through braking regeneration and idle start stop and offers up to 5-15 per cent of improvement in fuel consumption.

Even though mild hybrids do not offer a significant change in fuel efficiency tax benefits allows vehicle makers to make it attractive.

RC Bhargava, chairman of Maruti Suzuki, said since strong hybrids are expensive, India needs to "go step by step, as it is not possible, to introduce strong hybrid at an affordable price. At the moment mild hybrid is the best solution; with time and with more local manufacturing of parts, the electrification content in the engine can be increased."

Plug-in hybrids
Rising concerns on air quality in major cities is prompting automakers to bring forward plans for greener vehicles. Volvo Auto India is planning to launch plug-in hybrids, which the company claims will have zero emission for the first 40 km.

Tom von Bonsdorff, MD, Volvo Auto India told ET Volvo’s philosophy is to provide plug-in hybrid and not just hybrids.

"The average commute distance of most people in India would be less than 40 km per day and hence plugin hybrid car owners can contribute to the environment by exercising zero carbon footprint to their cities," he said.

According to experts, the sustenance of diesel vehicles in passenger car segment will largely depend on electrification of their powertrain. Even the larger petrol engines will require some sort of electrification to comply with the fuel economy regulations for future called CAFE.

"By 2020, about 40 per cent of diesel vehicles is expected to have some sort of electrification — either with stop/start systems or mild hybrids. Fuel economy regulations and BS6 will be the main drivers for that," said Suraj Ghosh, principal analyst, powertrain Forecasts, IHS Automotive.
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