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Informist, Thursday, Nov. 28, 2024

 

MUMBAI – HSBC Global Research Thursday said India will remain a multi-powertrain country for a prolonged period as electric vehicles are an extremely expensive proposition for the government. Hybrid, compressed natural gas, and biofuel powertrains are medium- to long-term solutions while the country moves towards electrification, the brokerage said in a report.

 

Powetrain systems comprise the main components that generate power and push the vehicle forward. To achieve decarbonisation, every powertrain in the country has a role to play over the next 10 years, HSBC Global said. The brokerage said electric vehicles are draining for the government due to significantly lower taxes and the original equipment manufacturers are making less money, while customers are uncertain due to range concerns and uncertain resale value.

 

The brokerage said India is currently offering the highest subsidies for electric vehicles in the world. Despite subsidies rising up to 40-50% of the electric vehicle's price, original equipment manufacturers are earning lower margins. The market penetration remains low at 2%. The brokerage believes in the medium-term, hybrids can help in decarbonisation, and may require regulatory support. 

 

The total carbon emissions from hybrid cars are 34% lesser than diesel variants, 25% lesser than petrol variants, and 16% lesser than electric vehicles. The share of non-fossil power in India, currently at 25-26%, has to reach 44% for electric vehicle emissions to break even with hybrid variants. This might take 7–10 years, the brokerage said.

 

In 2023-2024 (Apr-Mar), the powertrain mix in India was dominated by petrol, which constitutes 65% of fuel mix, followed by diesel at 18%, compressed natural gas at 12%, electric vehicles at 2%, and hybrid at 2% of the fuel mix, HSBC said. As the corporate average fuel efficiency norm and Bharat stage norm becomes stringent over the next five years, diesel vehicles might find it difficult to maintain market share as compared to hybrid vehicles, the brokerage said. 

 

The brokerage firm said it believes Maruti Suzuki Ltd. can maintain a market share of 40-42% in FY25 in the highly competitive and low-growth market. A growing compressed natural gas penetration, a likely cut in hybrid taxes, and some pick-up in entry-level car demand remain risks to the upside. In addition, a strong operating leverage and product mix should drive margin expansion over the medium-to-long term. The downside risks to Maruti Suzuki's growth prospects include a weaker-than-expected customer response to new launches, a lower-than-expected market share recovery with new product launches, and increased discounts which could materially impact its profit expectations. It further added that appreciation of the Japanese Yen could impact its estimates, and increased commodity prices or cost of ownership of vehicles, constitute a downside risk for demand.  End

 

Reported by Apratim Sarkar

Edited by Deepshikha Bhardwaj

 

 

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