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Suzuki Motor Corp., Toyota Motor Corp. and Honda Motor Co. have started developing strong or full hybrid cars for India and are expected to introduce them by the end of 2021, said two people with direct knowledge of the development.

The Japanese automakers have been encouraged by the Union government’s assurance that it will not differentiate between hybrid and electric vehicles while offering financial incentives to makers of eco-friendly vehicles.

The carmakers are expected to initially offer the hybrid technology in locally produced midsize sedans, the people cited above said, requesting anonymity.

Japanese companies have been mostly focusing on petrol-electric hybrids, despite a rising global trend towards battery-powered electric vehicles. The companies are now collectively lobbying the Indian government to extend financial incentives offered on electric vehicles to hybrid vehicles as well. They argue that hybrid vehicles are more fuel-efficient than those that run on petrol and diesel, while emitting substantially less carbon.

As part of its aim to curb rampant pollution in cities, the government plans to promote the local manufacturing of lithium-ion batteries that can be used for both hybrid and electric vehicles.

Toyota and Suzuki, as part of their partnership to develop hybrid vehicles for India, have started developing a common platform, primarily developed by Toyota and code-named GAC. The platform would be used by both companies to make their respective hybrid vehicles for India and other markets, the people said.

Honda has also finally decided on its plan to introduce hybrid vehicles in India and its first full hybrid vehicle would be the next generation City (a midsize sedan), the people said. They said the company had officially conveyed its plans to stakeholders associated with product development.

The next generation City model would be launched in India by 2020 with petrol and diesel engine options, followed by the hybrid variant in 2021, the people said.

“It makes sense for the company to introduce hybrid technology through its most popular product. Most of the Japanese players are working on making this strong hybrid technology affordable in India," said one of the two people cited earlier.

“We have plans to introduce hybrid vehicles in India within three years. It will take some time to make electric vehicles affordable and, until that moment, to contribute to a pollution-free society, I think hybrid will be the bridge to electric vehicles," Gaku Nakanishi, president and chief executive of Honda Cars India Ltd, said in an interview in October 2018.

Kenichi Ayukawa, managing director and chief executive of Maruti Suzuki India Ltd, said in December that the company had started working on a strong hybrid vehicle for India.

A spokesperson for Honda Cars India declined to comment.

Suvranil Majumdar, project lead-electric mobility at International Finance Corp., said launching strong hybrids in India was a stop-gap arrangement for most of the Japanese companies until they successfully develop electric vehicles for Indian conditions.

“Most of these companies have electric vehicle strategy in place for India in the future. Hybrids are more efficient than diesel- or petrol-run vehicles, so they are trying to use hybrids as an intermediate step towards full electrification," said Majumdar.

The road transport and highways ministry has already recommended lowering of the goods and services tax on hybrid vehicles from the current 43%. The heavy industries ministry in its proposal for the second phase of the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles in India (FAME) scheme wants to initially offer incentives for 10,000 hybrid vehicles.

According to the second person cited earlier, Toyota and Suzuki are working on how to make their hybrid cars more affordable for India and, now with the government changing its stance on hybrids, the companies are confident of securing incentives for their vehicles.

“It’s likely that both the companies will introduce this (hybrid) technology through a product in the sedan segment and (this) will be around 2021–2022," said the second person.

A spokesperson for Maruti Suzuki declined to comment. Atsushi Oki, vice-president of Toyota Kirloskar Motor Pvt. Ltd, declined to elaborate on the collaboration with Suzuki. “Details on each model such as the schedule of the start of supply, number of supplied units, vehicle specifications, etc. are currently under discussion," said Oki.

On 21 January 2019, Mint reported that Toyota and Suzuki were trying to reduce the cost of development of hybrid and electric vehicles by sharing development costs.

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