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Key Points

India's automotive market is experiencing a nuanced transition towards electrification with hybrid and electric vehicles showing complementary growth. HSBC research indicates that contrary to previous assumptions, hybrid and electric vehicles are not competing but attracting different consumer segments. The report highlights rising EV penetration, increasing from 1.9% to 3.2% in recent quarters, driven by new model launches and government incentives. This multi-powertrain approach suggests a flexible pathway towards eventual complete electrification of India's automotive ecosystem.

Key Points: HSBC Reveals India's Hybrid EV Growth Trajectory

  • EV penetration rising from 1.9% to 3.2% in recent quarters
  • Hybrid and electric vehicles attracting different customer segments
  • Government incentives driving multi-powertrain ecosystem growth
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New EV models, govt incentives to drive hybrid penetration growth in India: HSBC

HSBC research highlights complementary growth of hybrid and electric vehicles in India's evolving automotive landscape

"This is not a zero-sum game, but rather an incremental opportunity - HSBC Research Report"

New Delhi, May 21

EV penetration in India has improved with new model launches over the last six months, and new model launches and government incentives will drive hybrid penetration growth in the near term, an HSBC report said on Wednesday.

Contrary to popular assumptions, hybrids are not currently competing with EVs, but rather, are complementary to them. For instance, in states with hybrid incentives, EVs have grown more even after incentives were announced, said HSBC Research in its note.

"We think India will remain a multi-powertrain industry over the medium to long term," it stated.

Hybrids, CNGs and biofuels are practical medium- to long-term solutions, while the country moves towards eventual electrification.

"We think strong hybrid electric vehicles (SHEVs) and battery electric vehicles (BEVs) are not cannibalising each other but, rather, are attracting different sets of customers. In states where incentives are offered for SHEVs, BEV sales have also seen strong growth," said the report.

In FY25, the growth in EV sales was similar to the growth in SHEV sales, despite incentives being offered on SHEVs by Uttar Pradesh, the largest PV selling state in India.

This trend suggests that SHEV adoption is having a positive effect on BEV sales, said the report.

According to the report, 4-wheeler EV penetration has improved from 1.9 per cent in H1 FY25 to 2.5 per cent in Q4 FY25 and 3.2 per cent in the Q1 FY26 quarter-to-date period, driven by launch on MG Windsor and M&M BEVs.

The SHEV share in total PV has increased to 2.4 per cent in FY25 from 2.1 per cent in FY24.

"The perception that promoting SHEVs will hinder EV adoption is misplaced, in our view. This is not a zero-sum game, but rather an incremental opportunity where incentivizing SHEVs contributes to the broader development of the clean mobility ecosystem, benefiting BEVs and advancing overall market growth," the report emphasised.

- IANS

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Reader Comments

R
Rahul K.
This is great news! India needs multiple clean mobility solutions. Not everyone can afford EVs right now, and hybrids are a perfect bridge technology. The government's approach of supporting all green options makes sense for our diverse market. 🇮🇳
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Priya M.
Hybrids are practical for Indian conditions where charging infrastructure is still developing. But I hope the incentives don't slow down EV adoption in the long run. We need clear timelines for full electrification.
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Arjun S.
Finally some sense in the EV debate! As someone who drives a hybrid, I can confirm it's the best solution for India right now - good mileage, lower emissions, and no range anxiety. Hope more manufacturers bring affordable hybrid options.
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Sunita R.
The report makes valid points but ignores rural India. What about CNG and biofuels for villages? We need solutions for farmers and small towns too, not just city dwellers who can afford fancy hybrids.
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Vikram P.
Good analysis by HSBC. The key takeaway is that this isn't an either/or situation. Different customers have different needs - some want full EVs, others prefer hybrids. The market is big enough for all clean technologies to coexist and grow.
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Neha T.
While I appreciate the balanced view, I'm concerned about hybrid maintenance costs. EVs have fewer moving parts. Will hybrids really be cost-effective in the long run? Need more data on total cost of ownership.

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