[coolkurt]

Budget 2020: EVs not made in India to get costlier; sales of Hyundai, MG Motors to get hit

Electric vehicles that are assembled, or imported to India are set to get costlier with Finance Minister Nirmala Sitharaman proposing to raise customs duty on them.

The customs duty on passenger vehicles (cars, SUVs and vans), bus and trucks, three-wheelers and two wheelers that are brought to India in completely knocked down (CKD) form is proposed to be raised to 15 percent, up from 10 percent presently from April 1.

In addition, customs duty on semi-knocked down (SKD) units of bus, trucks and two-wheelers is proposed to be raised to 25 percent, up from 15 percent. Duty on SKD forms of electric passenger vehicles and three-wheelers has been doubled to 30 percent, up from 15 percent.

Sales of the Hyundai Kona and the MG ZS EV, both of which are not manufactured in India, will get impacted by this revision. The newly launched Nexon by Tata Motors, the Tata Tigor EV and the Mahindra e-Verito EV will beat the hike since these models will be manufactured in India.

This will do wonders for the Nexon EV as it's already much cheaper than its two rivals. It remains to be seen if brands like MG will absorb the duty hike or look to pass it on to customers.

Source

[racer_ash]

Its a good thing IMHO. Will act as a barrier for cheap Chinese imports. Nowadays all that the Toms, Dicks and Harrys need to do is design a logo, import a cheap Chinese EV (mostly 2 wheeler), slap the logo onto it and voila! you have a new launch.

Ofcourse, mainstream manufacturers won't be much affected. They weren't when we had high import duties on ICE vehicles, they won't now too!

[Turbanator]

Correct, custom duty has been increased on SKD/ CKD. I will say this as a regressive move, we simply don't have enough volumes and most of the kits need to be imported. This small increase won't make manufacturers spend money on factories but rather make EV's costlier and difficult for normal folks.

[sri_tesla]

Originally Posted by Turbanator

Correct, custom duty has been increased on SKD/ CKD. I will say this as a regressive move, we simply don't have enough volumes and most of the kits need to be imported. This small increase won't make manufacturers spend money on factories but rather make EV's costlier and difficult for normal folks.

I don't agree that this is a regressive move. This may be painful for few people who are planning to buy vehicles like Kona or ZS EV in the next few months but this hike will force companies to bring in local manufacturing much quicker. This will help companies like Tata and Mahindra who are not only investing large sums of local manufacturing of EVs but also setting up local battery manufacturing units. Otherwise, you would see a ton of Chinese manufacturers continue to import EVs instead of setting up local manufacturing.

[The Rationalist]

One step forward and two step backwards. Why can't they allow to build volumes and then the companies will come to know whether to set up manufacturing units here. If they can't get volumes they will be in two minds to invest. With this move some manufactures will think twice before investing here. How many of us will plonk money if we are not sure about the chances of getting it back?

I can't understand equating Chinese things to cheap and all? Really, I have been buying lot of stuff from China and to be honest, equivalent Indian stuff are pathetic to say the least. If we are not capable enough to compete, you can't blame everything on China.

[Thermodynamics]

Originally Posted by sri_tesla

I don't agree that this is a regressive move. This may be painful for few people who are planning to buy vehicles like Kona or ZS EV in the next few months.

Need of the hour for EVs are volume and infrastructure. Without volume there is no sustainable business case. First build volume and then announce localization. I agree localization would benefit indegenous development but we need a minimum a threshold level, something like 10000 units per month. This is not the right time. It is indeed a regressive move.

While we speak of cheap things could pile up, We should also think we want Tesla's as well.

[wheelguy]

Originally Posted by The Rationalist

Why can't they allow to build volumes and then the companies will come to know whether to set up manufacturing units here. If they can't get volumes they will be in two minds to invest. With this move some manufactures will think twice before investing here. How many of us will plonk money if we are not sure about the chances of getting it back?

• It is clear that EVs are inevitable and our government is really working to speed up adoption, so they have to make their mind up about that.

• Because local manufacturing is the need of the hour. India needs local manufacturing to employ the larger chunk of population who are migrating from primary sectors (agriculture) to secondary sectors (manufacturing). These set of populace cannot directly take up tertiary sector (service) jobs.

• Because India clearly knows that Chinese companies are looking out for expansion as their domestic market is reaching stagnation and they cant afford to ignore Indian market. India with its huge consumer base, largest base of youngest population among all other countries in the world, and low entry barriers compared to other matured markets is their best option as of now.

To put it in one sentence, Chinese companies need our market at any cost, they cannot afford to avoid Indian market citing higher tax rates, Indian government is exploiting the situation to extract more. Despite the higher tax rates, India still is their best option among all other countries in the world!

[sri_tesla]

Originally Posted by Thermodynamics

Need of the hour for EVs are volume and infrastructure. Without volume there is no sustainable business case. First build volume and then announce localization.

Don't worry too much about volume and infrastructure. They will come quicker than most people are anticipating. The sooner the local manufacturing starts the better. No one would have believed an year ago, if someone said we will have an EV with 200+ kms of real world range at the same price of an equivalent diesel variant. Yet, here we are with Nexon EV at a price even lower than it's diesel counterpart in many states. It's made possible because of Govt's clear support for EVs and that too full-electric only. They are now just closing the loophole of CKD which is an easy for many global companies which already have EVs outside the country.

If Tata without not much experience in EVs is able to develop EVs at a competitive price in just 2-3 years, then I am sure other global manufacturers like Hyundai, Kia, MG, etc... with already manufacturing plants outside can replicate the same here as well.

[Thilak29]

I think lack of infrastructure for EV charging as an excuse is bit of making by rival companies who insist ICE is here to stay. Remember PCO booths ? With right incentives, every shop front with decent parking will have a charger placed and shall try to earn extra bucks by having charger setup. Installing charger is not like setting up a fuel station, moving parts are significantly less just like a EV.

[Vid6639]

Doesn't make sense at all. Shouldn't the Govt. have tried to improve acceptance and acceptability before hiking duties.

To setup an EV plant with local manufacturing is nowhere close to easy. The battery tech and motors manufacturing is still not there yet in India and this should have been giving more time till more EV's are on road so that buyers adopt to the tech.

MG and Hyundai were on the right track to assemble their EV's here to bring costs to reasonable level as well as get buyers to convert to the new tech.

[Thermodynamics]

Originally Posted by sri_tesla

Don't worry too much about volume and infrastructure. They will come quicker than most people are anticipating. The sooner the local manufacturing starts the better. No one would have believed an year ago, if someone said we will have an EV with 200+ kms of real world range at the same price of an equivalent diesel variant. Yet, here we are with Nexon EV at a price even lower than it's diesel counterpart in many states. It's made possible because of Govt's clear support for EVs and that too full-electric only. They are now just closing the loophole of CKD which is an easy for many global companies which already have EVs outside the country.

If Tata without not much experience in EVs is able to develop EVs at a competitive price in just 2-3 years, then I am sure other global manufacturers like Hyundai, Kia, MG, etc... with already manufacturing plants outside can replicate the same here as well.

I respect your perspective but I disagree. We are jumping guns too fast. I wish Nexon EV does good but if the demand for EVs doesn't churn numbers, I am afraid the fate will be similar to JTP and Nano.

Volume/infrastructure is not the bigger worry, instead it's is the Policy stability. If we keep changing policies overnight at such frequencies, foreign direct investment looking at longterm would think twice.

[GTO]

I think the government has done this just keeping one factor in mind = Chinese imports.

Meanwhile, the Society of Manufacturers of Electric Vehicles (SMEV) doesn't seem too unhappy with this update. Their statement:

Despite the adverse effect on the cost of the electric vehicles, the increase in import duties on the components (other than the power train and battery cells) is a rational step under the "Make In India" initiative of the government. It will have a bit of an adverse impact on the vehicles that have high import content forcing the manufacturers to either localise or pass on the costs to the customers.

We believe that the objectives of the EV policy won’t be entirely fulfilled until we ensure the energy required to run electric vehicles also starts becoming cleaner. Government's increased focus on renewable energy in the budget is a positive move towards cleaner energy.

The industry needs innovative ideas and technology, and the start-ups can play important roles in shaping the EV industry. The measures announced by the government on taxation and funding support would encourage numbers of start-ups to foray into the industry with their innovative solution.

[coolkurt]

This is a premature move by the government, unsettling a segment which is still in a nascent stage.

What we need is rapid development of EV infrastructure and availability of world class products for the customer to choose from.

Indian manufacturers were in limbo as far as the EV space is concerned, despite a few of them having a presence in the space for around a decade. The advent of foreign players jumping into the fray last year seemed to have shaken them up and forced them to finally stand up and compete or risk missing the electric growth story.

[volkman10]

Originally Posted by Thermodynamics

I respect your perspective but I disagree. We are jumping guns too fast. I wish Nexon EV does good but if the demand for EVs doesn't churn numbers, I am afraid the fate will be similar to JTP and Nano.

Seems the booking figures Nexon EV (nor Altroz) has been shared. The market seem not yet ready for EV's. The major reasons being cost, infrastructure and anxiety on charge.

Tata Motors Altroz was launched last month. The company says its new hatchback has a good order book in 10 days of launch, and the manufacturer is prepping for deliveries. Booking numbers have not as yet been revealed. Car manufacturers usually reveal booking numbers post the launch or even before the launch. Altroz and Nexon EV booking numbers are still a secret.

https://www.rushlane.com/tata-motors...-12351382.html

[Axe77]

How do CKDs fare under this regime? I think Lexus has recently announced CKD'ing the ES 300 which was an interesting development. Also, does this mean maintenance might be costlier on account of parts cost if these are imported by Indian dealers?