Lured by government incentives for fuel-efficient vehicles as the country accelerates efforts to cut worsening air pollution Indian carmakers are gearing up to launch affordable hybrid and electric cars in the next few years.
As the industry descends on smog-bound New Delhi for India’s biggest car show, starting tomorrow, foreign companies like Toyota will join domestic players like Tata Motors and Mahindra & Mahindra in displaying green cars designed to reel in potential buyers.
While hybrid and electric cars now make up a tiny fraction of sales, new government aid worth up to US$2000 a car could help catapult green vehicles to nearly a third of a market of five million cars by 2020, IHS Automotive says.
“It is not enough to just introduce new technology in India, you have to make it relevant for the market and the buyers,” said C V Raman, head of engineering at Maruti Suzuki India, the country’s top-selling carmaker.
India’s rampant pollution has forced the government’s hand.
Carmakers were left jittery, many having invested heavily in comparatively cheap diesel technology over the years to conquer India.
Reliance on imported parts still makes full-scale hybrid technology cars expensive, but with India’s new sales incentives, ‘semi-hybrid’ technology is seen as a potential longer-term solution.
To incentivise carmakers, the government introduced a scheme last year called FAME, Faster Adoption and Manufacturing of Hybrid and Electric cars, that offer concessions of up to US$2,032 on the sale of such cars.
The scheme, introduced before the New Delhi court order and originally planned for two years, will now likely be extended till 2020.
To be sure, some carmakers, like General Motors, Hyundai and Honda, are yet to be convinced on hybrid technology potential in India.
Toyota is among those now looking at bringing in a hybrid variant for future models, as well as cars it now sells in India, which is also moving towards stricter emission norms.
“Our strategy is to go for hybridisation,” said Naomi Ishii, head of Toyota’s India unit.
Ms Ishii did not give a specific timeline, but said the Japanese carmaker will first bring hybrid in for its top-end models and then in the mass segment, mainly because of the high cost of imported components.
Meanwhile Maruti, majority-owned by Suzuki, has already invested in developing a low-cost version of hybrid technology, irrespective of government incentives.
Maruti said the technology combined fuel efficiency and lower emissions, but is not as expensive as existing traditional hybrid technology.