Toyota urges India to cut taxes on hybrid cars
Toyota Motor Corporation, the Japanese automaker, is urging the Indian government to slash taxes on hybrid vehicles by up to 21%, stating that they produce significantly less pollution than gasoline-powered cars but do not receive equal policy support. In a letter addressed to the NITI Aayog, Toyota contends that the existing five-percentage-point advantage for hybrids over petrol cars is "insufficient" given the lower emissions and improved fuel efficiency provided by hybrid vehicles.
Proposed tax rates for hybrids and flex-hybrids
In the correspondence, Vikram Gulati, Toyota's India head, proposes that the tax gap between hybrid and petrol cars should be widened to 11 percentage points for hybrids and 14 points for flex-hybrids. This would result in a tax rate of 37% for hybrids and 34% for flex-hybrids, representing potential reductions of up to 14% and 21%, respectively, based on calculations by Reuters. "We would kindly request for a proportionate policy support," Gulati wrote.
Toyota asks the Indian government to subsidize hybrids
Additionally, Toyota, in its letter, requested that the Indian government incorporate hybrid vehicles into an incentive program that offers discounts to purchasers, a benefit currently exclusive to electric vehicles (EVs). Although Prime Minister Modi's administration has concentrated on boosting electric vehicle sales by providing millions of dollars in incentives for EV and battery production, Toyota maintains that a combination of electrified and alternative energy sources, such as EVs and hybrids, represents the "most optimal way" to decrease carbon emissions.
Challenges faced by hybrid cars in India
According to Toyota, India's tax structure and the use of pricier powertrain components, which include engines and electrified parts like batteries and motors, makes producing hybrids "30%-35% costlier than its petrol counterparts." Indian auto giants Tata Motors and Mahindra & Mahindra are supporting EVs, while Toyota and Honda Motor are advocating for hybrid vehicles. Toyota has initiated the development of EVs while also promoting hydrogen-powered vehicles, asserting that a "multi-pathway" strategy is essential to addressing the climate crisis.
Toyota is facing criticism for supporting hybrids
Toyota, the company that made hybrid technology mainstream with the Prius, has faced criticism from both investors and environmental organizations for its ongoing support of hybrids. Toyota's stance is that hybrids are a more viable option in markets where EV infrastructure is not yet fully established. Currently, India imposes a minimal 5% tax on EVs, while hybrids are burdened with a hefty 43% tax rate, just slightly below the 48% tax rate applied to petrol cars.
