Alternative-fuel vehicles account for 40% of car sales; EV demand surges, Pg17

Key Highlights:

• Alternative-fuel vehicles, including electric, hybrid, and Compressed Natural Gas (CNG) vehicles, accounted for over 40% of passenger vehicle retail sales in June.
• This marks the first time alternative-fuel vehicles have crossed the 40% sales threshold in India.
• CNG vehicles led sales at 24.3%, followed by hybrids at 8.3% and Electric Vehicles (EVs) at 7.8%.
• The surge is primarily driven by elevated petrol and diesel prices and concerns over inflation, partly due to the West Asia war.
• The two-wheeler segment contributed approximately 63% of total EV sales in June.

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Detailed Insights:

• Overall retail sales for the automobile industry in India grew by 22% in June.
• The share of alternative-fuel vehicles increased from around 38% in May to over 40% in June.
• EVs offer significant savings on maintenance and registration taxes, with various state governments providing concessions.
• Hybrids face higher taxes, ranging from 40-48% Goods and Services Tax (GST), similar to Internal Combustion Engine (ICE) vehicles.
• In contrast, EVs are subject to a 5% GST, making them more attractive despite higher upfront costs.
• Fuel prices have risen by Rs 7-11 across cities since the West Asia war began in February.
• EV penetration in the passenger vehicle category reached 7.5% in June, up from 4% at the end of the January-March quarter.
• Tata Motors reported its highest-ever monthly EV sales in June, with a 183% year-on-year increase.
• The current charging infrastructure is considered adequate for city-based EVs and two-wheelers, which often charge at home.

Key Concepts Involved:

• Alternative Fuel Vehicles (AFVs): Vehicles designed to run on fuels other than traditional petroleum fuels, such as electricity, CNG, or a combination.
• Electric Vehicles (EVs): Automobiles powered by one or more electric motors, using energy stored in rechargeable batteries.
• Hybrid Electric Vehicles (HEVs): Vehicles that combine a conventional Internal Combustion Engine (ICE) system with an electric propulsion system.
• Compressed Natural Gas (CNG): A fossil fuel substitute for petrol (gasoline) or diesel, stored under high pressure.
• Goods and Services Tax (GST): An indirect tax used in India on the supply of goods and services, levied at each stage of production and distribution.