Toyota Urges Indian Government To Revise Hybrid Vehicle Taxes: Report

Toyota Motor Corp TM reportedly urges the Indian administration to reconsider tax rates on hybrid vehicles.

A company letter shows that hybrid vehicles are far less polluting than petrol cars but do not get commensurate policy treatment, according to a Reuters report.

Toyota eyes escalating its production in response to the ascending demand for hybrids in India. However, the leadership under Prime Minister Narendra Modi appears more inclined towards electric vehicles (EVs) with tempting financial perks for companies that ramp up EV and battery production, reported Reuters.

India's current tax structure levies a mere 5% on EVs, in sharp contrast to a staggering 43% on hybrid vehicles.

Petrol cars, on the other hand, are subject to a 48% tax rate. Toyota's contention revolves around this narrow 5% tax difference in favor of hybrids over petrol vehicles.

Toyota suggested that tax differences over petrol cars should be broadened to 11 percentage points for standard hybrids and 14 points for flex-hybrids, as per the report, which cited the letter from Toyota's India country head, Vikram Gulati.

The report noted Toyota, which popularised hybrid technology with the Prius, has faced criticism from investors and climate groups for still supporting hybrids. Major Indian players like Tata Motors and Mahindra & Mahindra are staunch EV advocates.

India's tax mechanics combined with the increased costs of hybrid parts, like batteries and motors, make hybrid vehicle production costlier. By Toyota's estimates, they're "30%-35% pricier than its petrol counterparts."

Also Read: Toyota To Restart Production At Select Facilities After Vendor Mishap Halts Operations

Price Action: TM shares closed lower by 0.70% at $173.48 on Friday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.