Top executives from Japanese car makers call for merit-based tax incentives to unlock the potential of PHEVs amid rising global adoption.
27 Mar 2025 | 2836 Views | By Kiran Murali & Ketan Thakkar
Plug-in Hybrid Electric Vehicles (PHEVs) could play a crucial role in India's urban mobility landscape, offering the convenience of electric cars with the added security of an internal combustion engine. However, a lack of targeted incentives and high upfront costs continue to prevent these vehicles from entering the mainstream Indian ...
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Plug-in Hybrid Electric Vehicles (PHEVs) could play a crucial role in India's urban mobility landscape, offering the convenience of electric cars with the added security of an internal combustion engine. However, a lack of targeted incentives and high upfront costs continue to prevent these vehicles from entering the mainstream Indian market.
At the Future Powertrain Conclave held in Chennai on Wednesday, senior leaders from Toyota Kirloskar Motor and Maruti Suzuki highlighted the potential of PHEVs, particularly for city driving, while calling for urgent policy reforms to make them viable for Indian consumers.
“From a consumer's point of view, PHEVs offer excellent range anxiety,” said Vikram Gulati, Country Head and Executive Vice President at Toyota Kirloskar Motor. “They cover daily commutes on electric power with very low running costs, and the ICE is available when needed.”
There are primarily three types of hybrid vehicles: mild hybrids, strong hybrids, and plug-in hybrids. Plug-in hybrids have a larger battery that can be recharged using an external power source, allowing them to run longer on battery power alone.
However, despite their practicality, PHEVs remain significantly more expensive than their strong hybrid counterparts. This is primarily due to the larger battery pack — typically 8 to 12 kWh compared to 1.2 to 1.5 kWh in a strong hybrid — and additional systems required for external charging.
“But they cost more due to larger batteries and charging hardware. With current taxation, they’re even more expensive than strong hybrids. The TCO doesn’t work,” Gulati added, emphasizing the need for merit-based policy support.
While sales of mild and strong hybrid vehicles are increasing in the country, plug-in hybrid cars have yet to gain significant market traction. There are no plug-in hybrid models available in the mass car market. Only a few luxury car manufacturers, such as BMW, offer PHEVs in this market.
Around 90,000 hybrid vehicles were sold in India, accounting for nearly 2% of the total cars sold in the country, in the financial year 2023-24. Maruti Suzuki, Toyota, and Honda are the major carmakers offering mild and strong hybrid vehicles in this market.
Maruti Suzuki and Toyota view hybrids as playing a crucial role in the shift toward sustainability. They have been advocating that hybrid cars are cleaner than electric vehicles in terms of wheel-to-wheel carbon emission in the current scenario, given that almost 75% of India’s energy is generated by coal today.
The growth rate of PHEV sales globally is significantly higher than that of BEV and strong hybrid sales. Maruti Suzuki’s MD and CEO, Hishahi Takeuchi, had also said that PHEVs are a very interesting proposition, and the market must consider them seriously.
Gulati also pointed to the booming global adoption of PHEVs, especially in China, where sales grew by 82% year-on-year and around 70% the year before. Globally, sales of electrified vehicles show a strong trend in favor of plug-in hybrids.
“If you look at it globally, of all the electrified vehicle growth that has happened, hybrids grew globally at 27% year-on-year, BEVs grew at 25%, and PHEVs grew 60% year-on-year — driven primarily by China,” Gulati noted.
Joining the discussion, Anoop Bhat, Head of Powertrains & xEV Design at Maruti Suzuki India, acknowledged the technical suitability of PHEVs for Indian cities and cited the international momentum behind their adoption.
“Let’s say a plug-in hybrid with whatever capacity can get a range of 50–100 km — most urban situations are taken care of,” Bhat said. “You don’t need diesel or gasoline for day-to-day use. You only use it when going out. So yes, technically it can work.”
He also pointed to China's electrification trends to highlight the viability of PHEVs. In China, over the past three to four years, BEV sales have stagnated; however, sales of PHEVs and range extenders have increased. Probably this year or next, 50% of all EVs sold in China will be PHEVs,” Bhat said.
Yet, both leaders agreed that the real bottleneck lies in economics, not engineering. “This is not just a technical problem — it’s a commercial problem. If it was purely technical, PHEVs would already be in the Indian market. The challenge is making it work from a cost and business perspective,” Bhat emphasized.
Both executives called on policymakers to extend benefits to plug-in hybrids, similar to those enjoyed by battery electric vehicles (BEVs), suggesting that tax incentives be linked to carbon efficiency rather than the technology type.
“If you can solve this issue of merit-based taxation, I see no reason why PHEVs won’t take off — and take off at a rapid pace,” Gulati said. Not only should this issue of extra rupee tax be resolved, but it should also provide some benefits. Make it attractive for consumers to understand the total cost of ownership. And you're done.”
As India seeks to accelerate its clean mobility transition, PHEVs could serve as a pragmatic intermediate step, offering electric driving without the limitations of infrastructure. But unless addressed by fiscal policy, the cost hurdle may continue to keep them out of reach for the mass market.