The Indian government will need to continue supporting electric vehicle adoption by levying reduced GST of 5% till penetration in the luxury EV segment grows substantially, said a top executive at German luxury carmaker Audi.
Balbir Singh Dhillon, head, Audi India, said while the company is considering introducing more electric car models in the domestic market, and exploring the possibility of assembling them locally, policy continuity is required to make investments viable.
He emphasised that subsidies are needed to drive growth in the EV segment, “till the time we reach a decent penetration level”. “There is no science behind this; it’s just a gut feeling that, maybe by the time we reach 50% EV penetration in the luxury space, we need that support (lower GST) and thereafter, it is driven by itself,” he said.
EVs currently contribute about 3% of sales at Audi India, which the company expects to surge to 40-50% by 2030.
“Probably by midterm…in the next 5-6 years from now, at least, we intend to go close to 40-50%,” said Dhillon. He said Audi would continue its focus on petrol and EVs for growing its sales in the Indian market.
The company has plug-in hybrid vehicles in its global portfolio but has still to decide on launching them in India. “The direction of the government is clear. Hybrids are not part of our strategy (as of now),” he said.
India currently levies 5% goods and services tax (GST), plus cess, on hybrids. The tax incidence on hybrid vehicles in the country totals 43%, while battery electric vehicles (BEVs) attract a tax of about 5%.
Audi India plans to expand its EV portfolio, including by adding more affordable models, to attain its aim of achieving about half of its sales from electric cars by the end of the decade.
Dhillon said the company’s current EV range is priced at more than INR 1.2 crore, while petrol vehicles start at INR 50 lakh. “So, there is a gap of INR 70 lakh which we have to close. We will bring in more models. And at some point of time, we would also have to start assembling them locally to reduce prices (of EVs). For that we need threshold volumes. But that’s something we have to do (eventually),” he said.
The company is yet to decide on the new EVs that will be introduced in India over the next few years. Dhillon said company is aiming for sustainable business growth here, focusing on profitable operations that reinvest in new technology and better services.
