Now, there is a feeling that the demand for electric vehicles is slowing down in India and so on; however, according to the Mercedes India CEO, Santosh Iyer, it is still early to come to such a conclusion.
During the launch of the new E-Class, Autocar India spoke with Iyer, who said that though sales of EVs have gone down, the overall prices have increased due to volatility in the market, especially since most states have withdrawn subsidies.
Impact of Mercedes India Policy Changes on EV Prices:
Even in states such as Karnataka, EV prices have risen because services such as road tax exemptions formerly incorporated into EV prices have been overridden by new taxes that exclusively target EVs.
For instance, Telangana stopped giving full exemptions from road taxes on EVs and introduced the highest road tax, which is 15% of the vehicle’s cost. Likewise, Karnataka imposed lifetime taxes of 10% on EVs costing above Rs 25 Lakhs, and Delhi rescinded its free road tax waiver by charging 10% on it.
As cited in the research, Iyer posits that these policy variations are distorting the market across the country. Also, shifts in usage taxes distort the market’s value. We have 28 states; some have no road tax, some order it and some take back their stimuli once given. That being the case, how can one specify that the EVs are performing well?” he wondered, citing disparities in policies across the states.
Growing EV Sales of Mercedes India:
Still, Mercedes India has been experiencing a steady increase in EV sales. Electric models comprised just 2.5% of the company’s sales last year, and this year, they are already 6% in the period of January to September.
According to Iyer, the luxury EV segment is more influenced by the purchase price than by operating costs. He said that people become hesitant to engage in consumption when prices change smartly but receptive when prices become stable, an indication that the release of the localized EQS helped boost its sales when its price was reduced.
The Need for a Clear EV Roadmap:
Iyer emphasized the role of tax stability in the EV market development. He believes that instead of continuously changing taxes on EVs, there should be a straightforward plan for the next approximately three to four years. “It’s kind of like, ‘Let’s get 25 percent to 30 percent EV penetration, and then you can flip because you need scale to get EV prices down,’!” he said.
Overall, taking into account the current sales developments depicted in the second figure, Iyer remains bullish on the segment. The author agrees with him, supposing that with the stabilization of the policies and determination of the price at lower levels due to localization and economies of scale, the market of EVs in India will further advance.
