A drop in duties levied on electric vehicles imported into the country could prove to be extremely beneficial, as it would help automakers tap into much-needed volumes and reach viable scale, South Korean auto major Hyundai has said. The automaker supported the demand of American EV maker Tesla, which has sought a temporary lowering of duties on imported EVs. Hyundai noted support from the government in terms of taxation and creation of country-wide charging infrastructure were the two most critical factors to help grow the EV segment in India.
"We have heard that Tesla is seeking some duty cut on imports of CBUs. So that would be very helpful for the OEMs to reach some economy of scale in this very price competitive segment," Hyundai Motor India MD and CEO SS Kim told reporters here. Till the time companies are able to localise EV components and other infrastructure, EV imports could help generate some market in the country, he added.
"It will take OEMs time to localise EVs by 100 percent. We are developing made in India affordable mass market EV but at the same time if the government allows some reduction in the duty on imported CBUs that would be very helpful for all of us to create some market demand and reach some scale," Kim noted.
At present, cars imported as completely built units (CBUs) attract customs duty ranging from 60 per cent to 100 per cent, depending on engine size and cost, insurance and freight (CIF) value less or above USD 40,000.
Last week, Tesla CEO Elon Musk said the company may set up a manufacturing unit in India if it first succeeds with imported vehicles in the country. He, however, said at present import duties in India are "the highest in the world" and is hoping for "at least a temporary tariff relief for electric vehicles".
Kim noted that the domestic market is ready for electric two- and three-wheelers but it may take some time for four-wheelers to gain a foothold. "We need some more support from the government in terms of tax and some incentives. From our experience in various global markets, such as South Korea, China and some European countries, we know that in India there still remains the anxiety related to charging infrastructure and the pricing of EVs," he stated. Range anxiety is very serious matter from a customer viewpoint, he said.
Kim noted that in order to make EVs affordable, the government can offer subsidies under FAME scheme to private customers as well. He added that with government support the industry can reach some level of scale in two years. "If we have some meaningful support, even for the private customer, that would be very helpful. Also, the tax reduction will be great for the customer. If the demand is there and market is starting to grow, I think that in two years we can reach the meaningful point in terms of scale and from that point we can manage," Kim noted. "Until we reach that point, we need support from the government and that would be very critical for the segment," he added.
On developing charging infrastructure in the country, he noted that the company could take some measures, but it would be very limited in scale. "Not only reduction in duties but more investment on charging infrastructure from the government would be critical for the future of EV market in the country. The customer is most concerned about the range and charging options. In this regard we need some very strong support from the government," he added.
Speaking about the prospect of launching its Ioniq EV in India, Kim said, "Hyundai Ioniq is a great looking and performance vehicle. We are studying the feasibility of the model. If the market and the customer want that vehicle, we can try to bring it." The company currently sells only Kona Electric SUV in the country. It is said to be working on a locally-developed EV, which will be far more affordable than the Kona Electric.
With inputs from PTI