Strong sales of hybrid cars in India, Modi government takes a roundabout approach towards electrification.

Electric cars are losing momentum in India. The government led by Prime Minister Modi hopes that by 2030, battery-powered cars will account for 30% of the country's new car sales, a plan known as the "EV30@30 target initiative". However, the rapid growth in sales of hybrid cars means that achieving this goal will be more circuitous. According to data from the automotive business intelligence company JATO DYNAM JAPANics India, sales of pure electric cars increased by around 7% in the first eight months of this year. Gasoline and diesel hybrid electric carsthose that use both batteries and internal combustion engineslead by around 20%. Indeed, over the past year, hybrid cars have become increasingly popular among new car buyers from the United States to China. The Modi government has also been promoting the development of this market, and under the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) program, the Indian government has been subsidizing dual-power cars, with the second phase of the program ending in March. Policies in individual states in India have also proven ineffective. In July of this year, the state of Uttar Pradesh eliminated registration taxes for strong hybrid cars (only powered by batteries for short distances), and Karnataka may take similar measures. Both the national and state governments in India have not encouraged the rapid development of charging networks for pure electric cars and plug-in hybrid cars. Currently, in India, one charging station can serve 135 electric cars, while in more mature markets globally like China and the United States, there is at least one charging station for every 20 electric cars. This has made Indians anxious about the range of their vehicles, thereby limiting sales. According to data from JATO DYNAM JAPANics India, these issues have led to so-called mild hybrid cars (which use gasoline but also use batteries to slightly improve fuel efficiency) accounting for 11% of total new car sales in India in the first half of this year. Meanwhile, electric cars only account for 2.5%. The Indian government can at least address some policy flaws. For example, the third phase of the FAME program may restrict subsidies for electric cars and plug-in hybrid cars. Without such reforms, the Indian government is unlikely to come close to its EV30@30 target; research company BMI estimates that by 2033, the share of purely battery-powered cars in new sales may be less than 7%. A draft document from the Karnataka government reveals that the southern Indian state plans to reduce road taxes and registration fees for new hybrid cars priced below $30,000. According to data from the automotive business intelligence company JATO DYNAM JAPANics, sales of pure electric cars increased by 7% from January to August this year compared to the same period in 2023. During the same period, sales of gasoline and diesel hybrid cars increased by 18% and 21%, respectively.