EV vs hybrid war: All clean fuel-run vehicles are equal for the PMO

The stand, confirmed by two top government officials, comes after manufacturers of both electric and hybrid vehicles sought the Centre’s favour after several state governments proposed incentivizing electric, hybrid and CNG vehicles equally.

“I do not understand why there is so much lobbying. State policies may differ, but the central government has supported both EVs and hybrids in clean mobility schemes. It cannot be that you incentivize one and not the other. The idea is to help all forms and all clean fuels,” one of the two officials said on the condition of anonymity.

The incentives for EVs and hybrids are aimed at reducing the country’s fuel imports and carbon emissions. “All clean mobility initiatives which contribute to this have been incentivized so far, and will continue to be so,” the second official said, also on the condition of anonymity.

Govt support

Mint reported on 6 June, quoting Union heavy industries minister H.D. Kumaraswamy, that the government would continue to support all forms of clean mobility, including hybrid vehicles, which combine the power of a traditional internal combustion engine (ICE) with an electric motor, improving fuel efficiency while cutting down on emissions and fuel usage.

Even in the past, the Centre supported hybrids and EVs alike in various subsidy schemes, including the second iteration of the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME India), which ran from 2018-19 to 2023-24.

Eventually, support for clean-fuel cars was removed under the PM E-Drive scheme (2023-24 to 2025-26). However, it continues to incentivize pure electric buses and electric and hybrid ambulances.  The outlay for incentivising such ambulances is ₹500 crore till the end of FY26.

Nevertheless, the Union government will continue to support policies to promote clean mobility through all possible means, including EVs, hybrid vehicles, as well as vehicles running on compressed natural gas (CNG) and liquified natural gas (LNG), among others, according to the government officials cited above.

The EV vs hybrid war

Mint reported on 24 April that the Delhi government had proposed to grant hybrid cars the same benefits as fully electric ones, raising concern among carmakers that had committed vast amounts to develop battery EVs, skipping hybrid technologies.

The draft of the Delhi Electric Vehicles Policy 2.0 seeks to waive road tax and registration fees on electric cars priced up to ₹20 lakh ex-showroom and extend the benefit to strong hybrid EVs (SHEVs) and plug-in hybrid EVs (PHEVs) with a similar price cap as well.

An SHEV is typically a car in which an electric motor gives significant assistance to the combustion engine. PHEVs, as the name suggests, come with a charging port for the battery that drives the motor. These vehicles can also run exclusively on the electric motor.

Uttar Pradesh was the first state to waive these charges for hybrid vehicles in July 2024.

CAQM direction 

Meanwhile, the Commission for Air Quality Management (CAQM) on 4 June also directed commercial vehicle operators to include ‘clean’ vehicles, including hybrids, in their fleets to help curb air pollution in the national capital.

Worried about losing market share, EV makers have urged the Union government not to incentivize them on par with EVs. They have argued that parity between incentives for hybrids and pure EVs would push consumers towards hybrids, which are not zero-emission vehicles.

India’s EV market was valued at $54.41 billion in 2025, and the hybrid vehicle market at about $0.53 billion, according to market research company Mordor Intelligence. India’s automobile market, the world’s third-largest by sales, was valued at $137.06 billion.

Clean-fuel clash

India’s major EV makers include Tata Motors Ltd, Mahindra & Mahindra Ltd, Hyundai Motor India Ltd, Kia India Pvt. Ltd, and JSW MG Motor India Ltd. The hybrid carmakers are led by Maruti Suzuki India Pvt. Ltd, Honda Cars India Ltd, and Toyota Kirloskar Motor Pvt. Ltd.

“Tata Motors believes that government incentives should be directed towards promoting zero-emission technologies such as EVs by bridging funding gaps, developing enabling infrastructure, and accelerating innovation to help them reach scale and maturity. Hybrid is an incremental and mature ICE technology, which is commercially viable and faces no funding or adoption barriers that typically warrant government support,” said a Tata Motors spokesperson in an emailed statement.

The spokesperson added that hybrids use fossil fuels, resulting in PM2.5, CO2, and other tailpipe emissions like any other ICE vehicles. Directing any incentives or subsidies toward them can divert India from its net-zero and energy security objectives.

‘Viability gap’

Rahul Bharti, senior executive officer, corporate affairs, Maruti Suzuki, countered the argument, saying that strong hybrid EVs reduce CO2 emissions by 25% to 31% over pure petrol vehicles and increase energy efficiency by 36% to 44%, but they still have a viability gap.

“So, the tax cannot be the same for a strong hybrid and a pure petrol/diesel vehicle. Data shows that wherever SHEVs have been incentivized, the sales of BEVs have not fallen at all; on the contrary, they have gone up. SHEVs will help reduce pure diesel/petrol cars, and that is in the national interest,” he added.

While hybrid vehicle sales rose about 12% year-on-year to 365,024 in 2024-25, pure EV sales rose 17% to 1,967,313, showed data from the central government’s Vahan portal.

Queries emailed on 5 June to the PMO, on 6 June to Mahindra & Mahindra, Hyundai Motor India, Kia India, JSW MG Motor, Honda Cars, and Toyota Kirloskar Motor, and on 7 June to the heavy industries ministry, remained unanswered until the time of publishing this story.

Experts weigh in

The share of non-conventional fuels has increased to a fifth of total passenger vehicle volumes, as against less than 5% five years ago, said Srikumar Krishnamurthy, senior vice-president and co-group head, corporate ratings, Icra Ltd.

“Specifically, hybrids have seen better acceptance in the last one and a half years as they reduce carbon emissions while managing to achieve good ranges. While hybrids at this stage are a stop-gap solution as EV infrastructure is yet to mature, they are also playing a strategic role in achieving sustainability and with more product launches and better product quality, it has become more popular.”