India’s Electric Vehicle Market Sees Growth with Hybrid Cars, Says HSBC
A recent report by HSBC Global Research has revealed that Strong Hybrid Electric Vehicles (SHEVs) and Battery Electric Vehicles (BEVs) are attracting different customer segments rather than competing against each other. This observation counters the perception that promoting SHEVs might hinder the adoption of BEVs in India.
Hybrid Vehicles Complementing EV Sales
The report highlights that hybrid vehicles have complemented the growth of electric vehicle sales in the country. In states where incentives were offered for SHEVs, BEV sales also saw significant growth. For instance, in FY25, the growth rate of EV sales was similar to that of SHEV sales, even when Uttar Pradesh, the largest passenger vehicle-selling state in India, offered incentives on SHEVs. This trend indicates that SHEV adoption positively impacts BEV sales.
Addressing Concerns and Improving Penetration
The perception that promoting SHEVs will hinder EV adoption is considered misplaced by the report. Instead, it’s viewed as an incremental opportunity where incentivizing SHEVs contributes to the broader development of the clean mobility ecosystem, ultimately benefiting BEVs and advancing overall market growth. The report notes that EV penetration has improved with new model launches over the last six months.
Four-wheeler EV penetration increased from 1.9% in the first half of FY25 to 2.5% in the fourth quarter of FY25 and further to 3.2% in the first quarter of QFY26, driven by the launch of models like MG Windsor and Mahindra & Mahindra’s (M&M) BEVs. The SHEV share in total passenger vehicles has also increased to 2.4% in FY25 from 2.1% in FY24.
Customer Preferences and Market Trends
Customers are willing to purchase EVs if the value proposition is right, according to the report. For example, MG Windsor addressed concerns about battery replacement costs after 7-8 years by offering leasing solutions. M&M’s BEVs, on the other hand, alleviated range anxiety concerns with larger batteries and made EVs a style statement.
The report observed that SHEVs, launched by Maruti Suzuki India Limited (MSIL) and Toyota Kirloskar in September 2022, gained market share from diesel variants during FY23 and FY24. However, the share stabilized in FY25 despite various state incentives being offered during the year. The report concludes that new model launches and government incentives will drive hybrid penetration growth in the near term.
