Hyundai Motor Co.’s decision to launch the premium electric vehicle Kona as its first offering in the segment in India has been taken with aim of changing the way Indians look at electric cars, said Seon Seob Kim, managing director, Hyundai Motor India Ltd, the wholly-owned subsidiary of the South Korean auto maker. The company in the process will skip hybrid technology as an intermediate step towards adoption of electric vehicles, as the current tax structure makes manufacturing of strong hybrid vehicles unviable.
The South Korean company will, unlike its Japanese rivals Toyota Motor Co. and Suzuki Motor Co., not invest in a lithium-ion battery manufacturing plant in India unless there are economies of scale.
Several companies have introduced electric vehicles in India but consumers continue to have reservations about their range and performance, he said.
“The reason why we chose to introduce the Kona EV is because it is already proven in matured markets. It might bring in a change in customer mindset. Initially we will also set up some charging stations in our office and in some dealerships but as an original equipment manufacturer, we are not responsible for setting up charging infrastructure across the country," said Kim.
Hyundai will sell the Kona Electric SUV in 16 cities in India from July.
Mint reported on 29 May that Hyundai had three years ago hired consulting firm Deloitte Haskins to work on launching the electric vehicle at a premium price point.
The upcoming premium electric vehicle will have a home charging device designed to help allay concerns of customers about the lack of charging stations in India. Kona EV will have a range of more than 400 kilometres, a first in electric vehicles in India. The Kona along with the Nissan Leaf is considered one of the best electric vehicles in the world in terms of range on offer and vehicle performance.
Unlike Hyundai, its main competitor in India, Maruti Suzuki India Ltd has opted for a strategy woven around hybrid vehicles as the intermediate step toward full electrification. The Japanese parent company has finalized an agreement with Toyota Motor Co. for joint development of hybrid and, subsequently, electric vehicles. Suzuki has also invested in a lithium-ion battery manufacturing plant in Gujarat in a joint venture with Denso Corp. and Toshiba Corp. Suzuki, though, has started testing its first electric vehicle in India since last year.
However, Hyundai will need to generate volumes in India to justify investing in a lithium ion battery plant as the batteries needed for vehicles like Kona are bigger, resulting in the need for substantial investments, Kim said.
At present Hyundai Motor Co. is the only vehicle manufacturer in the world to offer an entire range of electric vehicles, including hybrids, plug-in hybrids, battery electric vehicles, and hydrogen fuel cell powered electric vehicles. The company plans to invest around $1 billion for developing electric products.
“Hybrid technology can be a bridge powertrain and is a very efficient solution. As of now everything depends on the government subsidy and tax structure. At present, the GST levied on such vehicles make it difficult for us to sell them in India and make profit," said Kim.
Under the present goods and services tax structure in India, hybrid vehicles attract 43% tax, including 28% of the goods and services tax alongside a 15% cess as most hybrids are bigger than 4 metres in length, as opposed to 12% GST levied on battery electric vehicles.
The government in March announced an outlay of ₹10,000 crore for promoting electric mobility in India, under the second phase of the Faster Adoption and Manufacturing of Electric and Hybrid Vehicles (Fame 2) scheme, including subsidies for vehicles.
Reuters news agency on 6 May reported that the government may ask ride hailing service provider like Ola and Uber to convert 40% of their total fleet to electric in the next six to seven years. In a separate report, The Economic Times reported that the government may ban internal combustion engine-driven two and three wheelers from 2026.
“To solve the increasing pollution level in Indian cities electrification is the right direction but the industry needs a road map from the government regarding electric mobility," said Kim.