Intense lobbying by Japanese companies forces Tata Motors to change stand on hybrids

The unrelenting push by Japanese car majors for hybridization in India has forced Tata Motors to tweak its strategy and insert hybrids in the bouquet of future technologies.

Till now, the Mumbai-based company was working only on purely electric vehicle technology devoid of any significant plans for hybrids for the future. Tata Motors’ first fully-electric car for the personal buyer will hit the market in the Jan-Mar quarter in 2020.

“With all due respect hybrid is an evolution of an internal combustion engine. And hybrid is going to come and here to stay. We need hybrid solutions as diesel share will reduce and petrol share will increase and it is required to improve fuel efficiency, which is going to drive the CO2”, said Guenter Butschek, Managing Director – Tata Motors.

A senior executive of Tata Motors added, "Hybrids were originally not part of our product plan. But moving forward we have included them as well alongside electric vehicles. We are working on them and hybrids will sit in between ICE and EV."

Divided house

The issue of hybrids split the automobile industry right down the middle. On one side are Maruti Suzuki, Toyota, Honda and Volvo, who are advocating faster promotion and adoption of hybrid technology. And, the other side is made up of Tata Motors and Mahindra & Mahindra rooting for bypassing hybrids and instead going for pure electric mobility.

A hybrid vehicle makes use of twin propulsion system, petrol (or diesel) and an electric motor. This gives the vehicle an extended drive range on a lower carbon footprint. Hybrid cars are known to deliver mileage of 35-45 km per litre.

The parent company of Maruti Suzuki, Suzuki Motor Corporation, and its Japanese partner Toyota are working on ‘affordable’ hybrid technology, which the two companies believe are the “perfect stopgap solution for the Indian market before moving to full electric mobility”.

Honda is developing a hybrid system for mid- and large-sized vehicles. It is also working to make the system compact to be able to run it on small cars such as those sold in India.

With advancement in technologies and higher localisation, hybrid cars are expected to be priced on par with diesel cars in the post Bharat Stage VI stage, RC Bhargava, Chairman – Maruti Suzuki, said in an earlier interview to Moneycontrol. Hybrid variants are expected to cost a premium of Rs 2.5 lakh over their petrol counterpart.

After intense lobbying by the Japanese companies in the run-up to the MOVE Summit in 2018, the government did an about-turn. From increasing GST on hybrids to bring them on par with other regular petrol and diesel cars, the government announced incentives to hybrids later.

This sudden change in the policy caught the Indian car manufacturers off-guard who had aligned their business plans towards electrification.

“There will be a huge degree of confusion in the larger industry, including the private sector which is finalising investments. There are so many companies ready to set-up charging stations and even battery manufacturing factories. Now with hybrids, there is no need for those investments,” said Butschek in an earlier interview to Moneycontrol.

Tata Motors already has an electric car in its portfolio. The e-Tigor, which supplied only to a government-owned company, opened up to the private buyer a few months ago. Though the company wants to offer electric cars at different price points, it declared that petrol, diesel cars would not fade away anytime soon.