Billions of dollars are flowing into research, manufacturing plants, and charging infrastructure, building a robust EV ecosystem. By August 2024, nearly 30% of all passenger vehicle sales in India came from cleaner energy options like CNG, hybrids, and EVs, up from 25.8% a year earlier.
The rise of hybrids: A cost-effective solution
While EVs grab the spotlight for their futuristic appeal and zero emissions, hybrid vehicles—especially strong and plug-in hybrids—are emerging as a compelling middle ground. For consumers looking to reduce their environmental footprint without fully committing to EVs, hybrids offer an appealing balance.
They provide improved fuel efficiency and lower emissions, while maintaining the convenience of traditional engines, making them a popular option for drivers seeking a mix of sustainability and practicality.
Hybrid adoption trends
Globally, hybrid adoption has been on the rise. In China, the world’s largest auto market, hybrid penetration has quadrupled from 5.3% in 2021 to 19.9% by mid-2024. South Korea has seen similar growth, with hybrid penetration rising from 11.8% in 2021 to 25.2% in 2024.
Data from the Nomura Research Institute also indicates that other key markets, including Japan, the UK, France, and the US, have experienced a surge in hybrid adoption as consumers seek a middle ground between electric and traditional internal combustion engine vehicles.
In India, hybrid vehicle adoption remains modest but is growing steadily. Hybrid penetration increased to 2.5% in the first half of 2024, up from 2% in 2023. Although these numbers pale in comparison to global leaders, they reflect increasing interest in hybrid technology among Indian consumers.
However, hybrids face competition from CNG vehicles, which accounted for 18.6% of India’s passenger vehicle volume as of August 2024, marking a 15.4% year-on-year growth.
Policy push meets consumer demand
Government policies are playing a crucial role in the hybrid resurgence. Supportive measures are making hybrid vehicles more affordable, offering consumers an alternative to fully electric options. For example, the Karnataka state government is considering tax exemptions for electric and strong hybrid vehicles priced below ₹2.5 million.
A similar policy in Uttar Pradesh, introduced in July, waives registration taxes for strong hybrids. These initiatives could significantly bolster hybrid adoption, particularly for automakers like Toyota and Maruti Suzuki, who dominate India’s hybrid market.
A consumer-driven trend
The hybrid vehicle surge is driven not just by government incentives but also by evolving consumer preferences. Drivers are increasingly seeking eco-friendly options without the range anxiety associated with full-electric vehicles.
Hybrids allow for electric-only commutes while retaining gasoline engines for longer journeys, making them a practical choice in regions with limited EV charging infrastructure.
A nationally beneficial solution
Hybrid technology offers significant national benefits for India. Unlike EVs, hybrids are not reliant on a widespread charging infrastructure, a notable barrier to EV adoption. With fuel efficiency gains of 35% to 45% over conventional petrol or diesel vehicles, hybrids help reduce fuel costs and cut India’s dependence on foreign oil.
Additionally, hybrids contribute to national carbon reduction goals, offering a 25% to 30% decrease in carbon dioxide emissions compared to traditional internal combustion vehicles.
Leading players in India’s hybrid space
Automakers are responding to the hybrid trend by expanding their portfolios to include both battery-electric vehicles (BEVs) and hybrids, offering flexibility to meet diverse market needs.
Maruti Suzuki has taken the lead in India with models like the Ciaz Hybrid and Ertiga Hybrid, while Toyota’s partnership with Maruti Suzuki has strengthened its market presence through models like the Camry Hybrid and Corolla Hybrid.
Hyundai, poised for an IPO in October 2024, has also launched hybrid models like the Kona Electric Hybrid and Ioniq Hybrid.
Tata Motors, known for its electric vehicles, has introduced the Nexon EV Max Hybrid, and Mahindra & Mahindra has ventured into the hybrid space with the XUV700 Hybrid.
On the components side, Sona BLW and NRB Bearings are making strides in hybrid and electric vehicle technologies. Sona BLW specializes in high-power-density EV systems and traction motors, while NRB Bearings focuses on precision components for hybrid and electric powertrains, exporting to major markets like Europe, America, Japan, and Korea.
The road ahead
Looking forward, the hybrid vehicle market shows no signs of slowing down. Supportive policies, technological advancements, and growing consumer demand for eco-friendly transportation options are expected to keep driving hybrid adoption. As hybrids carve out their own space in the market, they remind us that the future of mobility is not a one-size-fits-all solution. Instead, various technologies will coexist, each contributing to the transition toward cleaner transportation.
While EVs may dominate the headlines, hybrids are proving to be a viable long-term solution for both consumers and automakers. With strong growth in international markets and policy support in India, the hybrid revolution is poised to exceed expectations.
Disclaimer: This article is for informational purposes only and is not a stock recommendation.
This article is syndicated from Equitymaster.com