India a growing hot market for luxury electric vehicles segment
Last updated on January 28th, 2022 at 05:43 am
The luxury electric vehicles segment is fast becoming a hot commodity in the Indian market. Following the lead of Elon Musk’s Tesla, which is already making a buzz with its entry in India, luxury cars in the likes of Audi and Mercedes Benz are lining up a series of respective launches. Tesla is already garnering support from multiple state governments, a hint that India is ready for luxury electric vehicles.
Tesla is still unsure about its launch in India, as the Model S manufacturer still is awaiting assurance on its demand to avail a cut in import tax on fully built vehicles. On the other hand, the luxury automakers which already have a market presence in India are banking on the lower GST on electric vehicles and local assembling to bolster the launch of their vehicles. The tax breaks enable the automakers to sell some of the electric vehicles at prices greater than that of their fuel-powered vehicles.
Talking about automakers already in India, Mercedes Benz is a leader in the luxury vehicles segment in India, has announced its plans of introducing an EQS saloon for later this year – the car would be priced around the same of its petrol equivalent. Audi is also checking the feasibility of elect”ric vehicles’ local assembly to bring down the import tax. Volvo Cars, the Swedish company, is also exploring a similar strategy. BMW is working out to achieve duty fee exemption on importing fully built vehicles. According to experts, “A GST rate of just 5% for electric vehicles – it is as high as 50%, including cess, for premium diesel or petrol-powered passenger vehicles – is a key enticement for automakers.”
Furthermore, the basic customs duty on completely knocked down (CKD) kits, which are locally assembled, is around 40% for petrol, diesel, or also electric cars. For completely built units (CBU) that are imported from foreign plants, it is 66-110% depending on the value of the vehicle.
“The current GST benefits allow electric cars to be priced competitively closer to ICE (internal combustion engine). However, it applies to both CBU and CKD vehicles,” said Martin Schwenk, managing director at Mercedes-Benz India.
“Localisation has its distinct benefits as compared to importing via CBU route,” Schwenk said. “For EVs, just like our other high-end ICE vehicles, we see a business case for localisation as soon as we have sufficient sales volume.”