Where are the Toyota hybrids going? India?
Although the majority of transport needs are met on the sub-continent of India by two- and three-wheelers, which are also electrifying, it is good to notice the increase in electric four-wheel vehicles. BEVs now have a market penetration of 2.1%, up from 0.3% just two years ago, with over 21,000 sold in the first quarter of 2023. Alarmingly (to me), conventional hybrids (HEVs) have increased over the same period from a market penetration of 0.02% to 2.2%, with over 22,000 sold. HEVs are outselling BEVs — the reverse of the situation in most other countries that I am aware of.
The latest figures from Auto Punditz show a massive surge in Toyota HEVs in India.
We have been watching the market in northern Europe slowly exclude Toyota HEVs and wondered where the numbers were being made up. A check of production figures show that Toyota has not slowed production. Toyota still produces 8 million cars annually. Certainly, a lot sell here in Australia and in New Zealand, but the growth in the Indian sub-continent is quite significant.
Interestingly enough, in India, HEVs are called “strong hybrids.” (I wonder if they have weak ones?) It is perhaps a bit similar to their branding in Scandinavia, where Toyota called them “self-charging hybrids.” Those ads were banned for misrepresentation.
Only the geography has changed. The Indian Toyota website describes the popular Toyota Hycross thus: “The new Innova HyCross is propelled by the latest 2.0L TNGA petrol engine and the most advanced 5th Generation Self-charging Hybrid Electric Technology.” Same misrepresentation, different continent.
The Auto Punditz site shows BEV and HEV numbers together and note that they have reached an all-time high of over 21,000 each. Looking at the chart and the trajectory, it would be easy to speculate that Toyota’s HEVs will have a greater lead next quarter. Auto Punditz notes that combined sales of BEVs and HEVs reached 4.3% of the Indian passenger vehicle market. I fear that the conflation of the figures and the nomenclature will lead to confusion, and many Indians might not realise that a “strong-hybrid EV” is actually a petrol car. Very efficient, yes, but still a car powered by petrol.
Homegrown Tata and foreign-owned Toyota dominate these market, Tata with shares of 73% in the BEV market and Toyota with share of 83% in the hybrid industry. The best-selling BEV continues to be the Tata Tiago EV. The best-selling HEV is the more expensive Toyota Hycross.
New products introduced by Tata, Mahindra, Citroen, and BYD have helped boost BEV sales. Tata is selling the Tiato, the Tigor, and the Nexon Battery Electric Vehicless. Mahindra has the eVerito and the XUV 400. Citroen has the eC3; Hyundai the Kona EV; MG the ZS EV; and BYD the E6. In order of sales numbers, Tata is a long way in the lead with over 15,000 vehicles sold, then Mahindra with around 2,000, and the last on the podium is MG with 1,500. Off the podium, the numbers dwindle to zero — Citroen 1,100, BYD 900, Hyundai 94, and Kia 0. It is worth noting that the BYD Atto 3 only started deliveries in January 2023.
Auto Punditz expects current trends to continue as “Japanese automakers invest in strong hybrid technology, which combines a petrol engine with an electric motor and battery. Strong hybrids offer the benefits of both fuel efficiency and low emissions, without range anxiety, making them a popular choice for consumers. Additionally, the lower cost of production for strong hybrids compared to battery EVs may make them more accessible to a wider range of consumers.”
The main advantage of BEVs is their lower operating costs. The chart below also shows that homegrown BEVs are cheaper than their competing Japanese HEVs. “As the market continues to evolve, it will be interesting to see how these two technologies compete and complement each other in meeting the needs of consumers and addressing environmental concerns.”
Corporate Average Fuel Efficiency (CAFE) standards in India may be pushing some importers and manufacturers towards electrification. Increased CAFE standards may be responsible for exceptionally high deliveries of the Mahindra XUV400 and Citoren eC3 in March.
Autocar India tells us that CAFÉ standards are: “Imposed on a carmaker’s entire fleet, and not on an individual model, it is a limit set on the total emission of carbon dioxide produced. These norms force manufacturers to make more efficient cars … from 2022–2023 onwards, manufacturers have to comply with a base industry figure of 113gm of CO2/km, based on an average industry kerb weight of 1,145kg — a reduction in CO2 output of about 13 percent over the earlier period, despite the increase in weight.
“CAFE norms allow for super credits. Carmakers can get credits by selling relatively cleaner vehicles. This is done by adopting battery electric vehicles (BEV), plug-in hybrids (PHEV) and hybrid electric vehicles (HEV). The credits are awarded as follows: 3 for BEV, 2.5 for PHEV, and 2 for HEV. This means that one BEV sale will be counted as three, making your target easier to reach; a PHEV sale will be counted as two and a half; and an HEV sale counted as two in the overall fleet average sales-weighted CO2 emissions calculations.”
So, CAFE standards will only marginally accelerate the shift to BEVs while rewarding carmakers who produce so called “strong hybrids” almost as much.
Currently, the HEV segment of the market is dominated by SUV body styles (45%). The introduction of the Tata Tiago EV and Citron eC3 increased hatchback share in the BEV segment.
Due to production constraints, Tata appears to have shifted production from the Nexon to the Tiago. These cheaper Indian BEVS are in high demand. The Tata Tiago EV was the best-selling BEV in Q1 2023. The bestselling HEV was the Toyota Hycross. The Innova Hycross has been around since 2004 and is produced in several countries around the world, including India.
Auto Punditz believes that introducing a hybrid power train to the Hycross is a bold move on the part of Toyota. Due to Toyota’s high brand equity (and generous provisions of India’s CAFE standards), it looks like the move is paying off.
It will be interesting to watch the effect of India’s new CAFE standards on the drivetrains used in Indian auto manufacturing and the effect on HEV production especially. Will more HEVs show up in other emerging markets? South America perhaps? And will it have an effect on the rEVolution? Stay tuned!
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