Every EV Except Tata Tiago, Tigor, Nexon, Citroen e-C3 And MG Comet To Get A BIG Price Hike: Report
India’s proposed GST revision has had a major impact on the automotive sector here. In the past few days, car and bike sales have slowed down heavily. People are likely holding back from purchases to know the revised slabs and see if their preferred automotive models would qualify for tax cuts. The details of the new slabs are yet to surface. The federal GST Council begins a two-day meeting today to discuss and finalise the new tax structure. According to LiveMint's sources, the new tax structure will likely put every EV except budget offerings like the Tiago.EV, Nexon.EV, Tigor.EV, e-C3, and Comet, under a higher slab, making them dearer.
EVs To Get More Expensive In General
The previous structure of categorising and taxing vehicle models is expected to change. Under the new regime, sub-4 meter vehicles with up to 1200cc petrol and 1500 cc diesel engines will qualify for lower taxes. The GST on these will likely come down to 18%. The vehicles with overall lengths of over 4 meters and engine capacities exceeding 1500cc will, however, be put under a new 40% tax slab.
The latest reports point to electric vehicles likely following a similar pattern as well. Budget electric vehicles with lengths under 4 meters, will likely be put under the 18% slab while a higher 40% GST will be imposed on the larger ones, classifying them as ‘luxury goods’. For perspective, the current regime imposes just 5% GST on electric vehicles, which, over the years, has helped manufacturers to keep their prices handy.
The proposed tax slabs are much higher and will make electric vehicles more expensive. The 18% slab will bring about relatively smaller hikes in the prices of sub-four-meter EVs. The larger ones will be the most affected. Prices are likely to shoot up.
Deeper Details
India’s EV market is rather small. It has however, had a rapid growth rate in recent years. Electric cars and SUVs now make up about 5 per cent of the total car sales. The sub-four meter space here consists of the MG Comet, Citroen eC3, Tata Tiago EV, Tigor.EV, and Nexon.EV. Yes, the Tiago.EV, Nexon.EV and the Comet have strong footholds among Indians.
GST going from the current 5% to the proposed 18% could bring about small-yet-significant revisions in their prices. Let’s try to understand this with an example.
The fully loaded Exclusive FC variant of the Comet now has an ex-showroom price of Rs 9.96 lakh. This includes 5% GST. With 18% GST, the ex-showroom price could hover over Rs 10.66 lakh- an increase of around Rs 70,000. These, again, are rough estimates and the actual differences could vary- we’ll learn more about those after the new regime is announced.
The customers in this segment are price and value conscious. Thus, even the slightest fluctuation in ex-showroom prices can have a direct influence on purchase decisions and adoption rates.
All electric vehicles except the five models mentioned above will see major price hikes under the new regime. They are likely to be taxed at 40%. This will make them very expensive to own. This slab will apply even to the premium EV segment, which currently has a good number of footfalls in. The segment that the Mahindra BE6, XEV 9e, and the Harrier EV belong to, is quite popular. Smart pricing has a key role in keeping the appeal of these vehicles safe. The revised tax slabs will likely shatter this edge.
The MG Windsor EV reigns the mass-market EV segment. It, however, has a length of 4295mm, and will qualify for higher tax slabs. The top-spec variant of the Windsor EV (not the Pro) now has a price of Rs 16.29 lakh, ex-showroom. Under the new regime, it is likely to cost over 21.6 lakh rupees, ex-showroom.
The XEV 9e’s fully loaded Pack THREE B79 variant has an ex-showroom price of Rs 31. 25 lakh. Under the new regime, this could reach over Rs 40 lakh. Similarly, the range-topping Harrier.EV costs Rs 29.48 lakh, ex-showroom. It could touch Rs 39.2 lakh, post-revision.
Clearly, the buyers will not be happy with the revision. Models from Indian brands like Mahindra and Tata and foreign players like Kia, BYD, Hyundai, MG and other will all be affected by the move.
The revised slabs will likely bring about a slowdown in the EV segment. Sensing the same, auto manufacturers voiced concerns as soon as the discussions on revising EV tax slabs were taken up by the GST rationalisation group of ministers (GoM).
Auto Manufacturers Voice Concerns
The discussion seems to have unsettled EV-makers. Those who manufacture and sell high-end electric vehicles are the most affected. EV makers continue to express strong opposition to the proposed hike. Tata Motors' Shailesh Chandra said that the current tax rate was key in boosting adoption and reducing buyer reluctance. "It is therefore imperative that the 5% GST rate for EVs be retained,"- he added. A BMW India spokesperson said that the revision "can derail the vision of high electric adoption and local production."
Santosh Iyer, CEO, Mercedes-Benz India, said that the proposed revision will "mostly impact the entry level" luxury cars. "Our top end luxury battery EVs will not be impacted much,"- he added. JSW MG Motors’ Anurag Mehrotra said “To sustain EV adoption, we need stable long-term policies, accelerated CAFE norms, and zero percent GST on fully electric vehicles,". A Mahindra rep said that the 5% tax rate is critical for maintaining price competitiveness, especially in the Rs 10-40 lakh EV segment.