Japan’s Toyota Motors (NYSE:TM) has reportedly sent a letter to the Indian government, lobbying for the country to reduce taxes on hybrid vehicles by as much as one-fifth, The automaker argued in the letter that hybrid vehicles produce far less pollution than their gas powered counterparts, but do not get commensurate policy treatment
The biggest automobile manufacturer globally intends to expand its production capabilities to cater to the growing demand for hybrid vehicles in India. However, the government has prioritized the adoption of electric vehicles, offering companies substantial financial incentives to develop EVs and batteries.
In India, the tax rate for EVs stands at a mere 5%, in stark contrast to the significantly higher 43% tax imposed on hybrids, which is slightly lower than the 48% tax on internal combustion cars.
According to the letter, Toyota believes the 5% disparity favoring hybrids over petrol cars is "insufficient." Toyota argues that given the decreased emissions and improved fuel efficiency offered by hybrids, the tax differential should be as much as 11%, amounting to a tax rate of 37% on hybrids and 34% on flex-hybrids.
In the letter, Toyota also urged the Indian government to include hybrid cars in a government incentive program, offering discounts to customers. The policy is currently only available to EV customers.
Shares of TM are down 1.31% in pre-market trading Monday morning.