Petrol cars turn cheaper, is it still worth buying an EV?

GST rate cut trims price edge for electric cars, but may still be worth buying in some cases

- Shefali Anand

If you're shopping for a new car, the decision just got trickier. Electric or petrol?

A recent cut in Goods and Services Tax (GST) on certain internal combustion engine (ICE) vehicles and strategic price cuts by carmakers have made some petrol and diesel SUVs ₹2 lakh cheaper or more. That's good news for car buyers, but it also complicates one of today's biggest financial decisions: does an electric vehicle (EV) still make economic sense? The debate gains importance as air quality deteriorates sharply in the capital city and nearby, partly due to vehicle emissions.

The government has reduced GST on small cars (up to 1200cc petrol/CNG and 1500cc diesel, under 4m length) from 28% to 18%, while EVs continue to be taxed at a concessional 5% GST rate.

"EV was a little bit more attractive earlier, now the comparative economics has moved a little bit," said Subhabrata Sengupta, partner at Avalon Consulting. "The decision will come down to your usage pattern and what you're comfortable with," he said.

EVs are cheaper to run since they use electricity. But do those savings offset their higher purchase price? The answer depends largely on how much you drive.

"If you don't have a good running, then no EV," said Sourabh Sikri, a 47-year-old businessman in Dwarka, Delhi, who bought his first electric car last year.