Hybrids hit speed bump on tax tweaks

India’s hybrid car market is losing momentum as electric vehicles (EVs) pull ahead due to rising demand amid the West Asia war-induced fuel concerns and loss of its tax advantage over the fossil fuel variants eroding its appeal.

- Ayaan Kartik

Even as the broader passenger vehicle market posted robust sales, hybrid vehicles—which can run on fossil fuels as well as an electric motor—are losing pace in 2026, even as automakers prepare a string of launches to revive the segment.

EV penetration, or its share in total vehicle sales, has pulled significantly ahead of hybrids, widening the gap to more than 4% in recent months from around 2% in December 2025, as the growth in hybrids has lagged the overall industry for four consecutive months since February, data from government’s Vahan portal showed. Notably, sales of hybrid cars recorded a year-on-year decline in sales for the first time since separate data became available in May 2026, with total volumes falling 1.3% to 8,421 units as against overall passenger vehicle industry growth of 25% to 404,000 units. EV sales, on the other hand, surged 81% to 26,682 units during the month, giving it a 6.6% share in total sales as against the 2.1% share of hybrids.

Between January and May this year, India's total hybrid vehicle sales rose 12% to 48,846 units as against a 20% growth in total passenger vehicle sales to 2.24 million units.

Electric four-wheeler sales in the same period surged 74% to 117,489 units, giving it a 5.2% penetration as against 2.2% for hybrid vehicles.

Industry executives are pinning hopes on a series of launches in the hybrid segment by Hyundai, Renault, Kia, JSW MG and Honda to revive growth and bring back customer interest.

The developments come about a year after carmakers such as Tata Motors, Mahindra & Mahindra and Maruti Suzuki voiced a split view on whether hybrid vehicles need additional incentives as part of central and state government's clean mobility push.

"We have seen sales of hybrid vehicles stall over the past few months. Hybrids are not growing as we expected.