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EV vs ICE price parity for luxury cars unlikely in near future

By - 16 Feb 2024 09:14 PM

Carmakers Tata Motors, MG Motor India and Mahindra & Mahindra are narrowing the price gap between their electric vehicles and petrol and diesel models amid softening battery prices, but luxury carmakers do not expect such price parity any time soon. That is mainly because luxury battery electric vehicles (BEVs) are mostly imported into India, attracting up to 100% tax, and their sales volumes are too low to make local assembling viable for most models, industry executives and analysts said.

“The cost of EVs in the luxury segment is much higher because of it being an expensive technology and lower volume,” said Vikram Pawah, president at BMW Group India. “So, it would take some time before the EV prices come on par with on-road prices of internal combustion engine (ICE)-powered models,” he said. Santosh Iyer, managing director and CEO of Mercedes India, said, “I don't see that (price parity) happening in the near future as BEVs in the luxury segment have much more technological advancements compared to the EVs in the mass market.” That said, electric vehicles do benefit from a lower GST of 5% and are exempt from road tax in some states. Such incentives have helped take the EV penetration in the luxury segment to 4% in 2023 against less than 2% in the mass car segment.

Puneet Gupta, director at S&P Global Mobility, an automative research and analytics arm of S&P, said the price parity between EV and ICE in the luxury segment is still far away barring few high-end models and is likely to remain like that unless localisation takes off.