New Delhi: The Centre has proposed giving range-extended electric vehicles (REEVs) the same fuel-efficiency incentives as battery electric vehicles (BEVs) under the upcoming corporate average fuel efficiency (CAFE) III norms, despite continuing to classify the technology as a hybrid rather than a pure EV.
If adopted, it would mark the first time since the CAFE regime was introduced in 2017 that REEVs are treated on par with battery electric vehicles under India’s fuel-efficiency framework.
Under the draft CAFE III norms released on 16 July, REEVs would receive three “super credits”—the same as BEVs—allowing one vehicle to count as three for compliance purposes and helping automakers lower their fleet-average emissions.
Unlike hybrids, which are primarily driven by a combustion engine with a small battery for support, REEVs are largely powered by a battery, with a small internal combustion engine that helps recharge the battery and extends the range of the vehicle. Pure EVs are completely battery-powered.
The proposal, however, sits at odds with the government’s own definitions. A 6 November 2023 notification issued by the ministry of road transport and highways classified REEVs as equivalent to conventional hybrids.
Even the draft CAFE III norms classify REEVs alongside plug-in hybrid electric vehicles as “strong hybrids” with provision for off-vehicle charging, yet propose three super credits for REEVs and only 2.5 for plug-in hybrids.
The apparent inconsistency has reignited the debate over whether REEVs should be regulated more like battery electric vehicles or hybrids, with experts saying the government needs to clearly spell out the basis for treating the technology differently.
Sharif Qamar, associate director at The Energy and Resources Institute (TERI), said treating REEVs like BEVs weakens the intent of super credits.
“A REEV has an on-board engine and therefore cannot be equated with battery electric vehicles, which are zero-emission at the tailpipe,” Qamar said.
Another expert said the government must make its objective clear.
Amit Bhatt, India managing director at the International Council on Clean Transportation, said that globally, plug-in hybrids and REEVs are treated the same, while battery electric vehicles are treated differently.
“It is also important to ascertain the objectives and purpose of any regulation to determine whether different technologies can be given equal incentives, or if they have to be ranked according to tailpipe emissions,” Bhatt added.
Carmakers have mostly remained muted on the equivalence drawn by the government, with industry executives noting that the REEV technology can offer similar benefits as EVs.
“The purpose of CAFE is to promote zero emissions. From a technology and emissions perspective, range-extended electric vehicles are significantly closer to pure EVs than to conventional hybrids,” a senior executive at a passenger vehicle manufacturer said on condition of anonymity as the discussions with the government are private.
Complementing EVs
Some carmakers have publicly stated that REEVs remain a viable option to complement EVs, unlike strong hybrid vehicles, which are closer to their ICE peers.
Nalinikanth Gollagunta, CEO-automotive division at Mahindra and Mahindra Ltd, told Mint in an interview in November that EV and ICE are on two ends of the spectrum on which a hybrid is just an upgrade from ICE while an REEV is just a downgrade from an EV.
“We'll see how it plays out. If the regulatory environment changes, there can be an optionality we can bring in at that point in time,” he said.
Mint reported on 20 November that the Associated Chambers of Commerce and Industry of India wrote to the ministry of heavy industries that the current tax structure would force automakers to introduce such vehicles at a higher price as they are generally heavier and bigger in size.
The lobby group wants such vehicles to be taxed at 5%, just as electric vehicles. Assocham counts Maruti Suzuki India Ltd, Toyota Kirloskar Motors India Ltd, JSW Group and Mahindra & Mahindra (M&M) as its members.
None of the carmakers currently offers an REEV vehicle, with conventional hybrid vehicle sales mostly with Toyota and Maruti Suzuki.
Last year, domestic carmakers Tata Motors PV and M&M locked horns with Japanese carmakers Maruti and Toyota over whether hybrid vehicles should receive similar incentives as EVs. While the local carmakers opposed any such incentives, Toyota and Maruti have repeatedly raised the demand for treating hybrids favourably.
Queries sent to Tata Motors PV, Maruti Suzuki, Mahindra and Mahindra, Hyundai Motor India and Toyota Kirloskar remained unanswered. The ministry of road transport and highways, the ministry of heavy industries and the power ministry did not respond to emailed queries.