Mercedes-Benz to push for EVs, not hybrids in India

Though hybrids haven't been ruled out completely, Mercedes finds the current norms to be more conducive for battery electric vehicles.

Published On Oct 22, 2020 01:01:00 PM

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Mercedes-Benz to push for EVs, not hybrids in India

The Mercedes-Benz EQC was recently launched at Rs 99.30 lakh (introductory price, ex-showroom, India), marking the foray of a luxury car brand into the electric vehicle segment in India. Building on its electrification strategy, Mercedes has revealed that it will be pursuing EVs, rather than hybrids, in our market.

Hybrids taxed at higher rates compared to EVs
With current government incentives, Mercedes India to pursue electric vehicles
EQC local assembly not on the cards for now

Mercedes-Benz India to pursue battery electric vehicles

In a digital interaction with Autocar India, Martin Schwenk, MD and CEO, Mercedes-Benz India, highlighted the company’s prospects for EVs, compared to hybrids. “For now, we will first push into the battery electric vehicle segment,” he said.

The company boss attributed the decision to the current regulatory framework in the country that heavily incentivises electric vehicles. Putting things in perspective, EVs are taxed at a flat 5 percent of GST, while hybrids attract a hefty 43 percent duty (28 percent GST + 15 percent cess). Moreover, many states have waived off road taxes for battery EVs. This concession on registration charges, for instance, results in an additional 10 percent tax saving on electric vehicles, costing over Rs 10 lakh in the national capital region.

“If we keep GST reductions at the current level, and continue to have that for the foreseeable future, it will definitely help bridge the price gap between ICE (internal combustion engine) and electric vehicles and then, I see a strong adoption over time,” said Schwenk.

Mercedes' focus on EVs in India is in line with its ongoing push towards global electrification. The company is aiming for electrified vehicles (plug-in hybrids and battery EVs) to constitute half of its sales in international markets in 2030, and achieve CO2 neutrality on a global scale by 2039.

By launching the first premium EV in the country, Mercedes has established its leadership in the luxury electric segment. And the initial consumer response is also reported to be good. "We are quite positive about what we have. We have some orders already and a lot of interest in the vehicle" mentioned Schwenk.

Hybrids not a key focus in India

Though Mercedes has been mulling plug-in hybrids for its India portfolio for some time now, the company has chosen to stay clear of the technology. “I think, plug-in hybrids will have their space (globally), but we would not expect a wide adoption in India because, as per the framework, there's no policy support on import duties and consumer taxes,” mentioned Schwenk.

The automaker’s strategy is reflected in the fact that it only offers mild-hybrid technology, and not the full-fledged plug-in hybrids, in India, and that too across a very limited range of products which includes the GLE 450, GLE 53 Coupe and GLS 450 SUVs. Even the C-class sedan’s mild-hybrid petrol was dropped from the line-up, earlier this year.

In contrast, Mercedes has a strong presence in the hybrid segment in international markets, where it offers plug-in hybrid variants of most of its vehicles, starting from the A-class hatchback, all the way up to the GLE SUV and the flagship S-class sedan.

The car major, however, hasn’t entirely closed the doors on the hybrid route in India. “Because the global portfolio (of plug-ins) is being built in many countries, we will be able to bring the cars if we need them - be it CBU or CKD operations. Let's see, I would not exclude it, and there are always options,” said Schwenk.

Mercedes EQC performance to determine brand’s electrification strategy

With the launch of the EQC, Mercedes is testing the waters for an EV market in India. And while the EV is not intended to be a "volume car", its market performance will determine the pace of the auto major's electrification plans for our country.

Mercedes will take the covers off its flagship luxury electric, the EQS sedan, next year. The brand has also confirmed its plans for an EQE sedan, EQE SUV and an EQS SUV for global markets where it intends to have over 10 pure electric cars by 2022.

No plans for Mercedes EQC local assembly yet

Despite the numerous tax sops for EVs, the EQC is expensive. While the high pricing can partly be attributed to the high cost of batteries, another contributing factor is the punitive import duty structure.

The EQC has been brought in as a CBU (completely built-up unit), thus in addition to the GST, it attracts a hefty import duty of 100 percent. As such, local assembly can help in lowering the prices, considering that SKD (semi-knocked down) electric passenger vehicles are taxed at 30 percent and CKD (completely knocked down) EVs attract an import duty of 15 percent. However, local assembly would necessitate a sufficient scale, something that will take time to build up.

“For the EQC, we currently don't plan local assembly,” confirmed Schwenk.

With electrification being touted as the future of transportation, Mercedes seems cautiously optimistic in choosing EVs over hybrids for India. It will be interesting to see how this pans out, especially with rivals Audi and Jaguar also training their sights on luxury electrics for our market.

Also see:

Mercedes-Benz EQC India review, test drive

2020 Mercedes-Benz EQC India video review

Road tax on EVs waived off in Delhi