Tata Motors cuts Tigor EV prices by up to 80K: Will it boost the sale?

Yesterday, 1st August, Tata Motors announced prices reduction of its electric vehicles (EVs) by up to Rs 80,000 following government's decision to bring down the GST on electric vehicles from 12 to 5 per cent. The steep reduction in the GST (goods and service tax) rate affected the cost of electric two-wheelers, three-wheelers and cars. Manufactures including Tata, Mahindra and Ather Energy reduced prices of their models — up to Rs 80,000 for e-cars and up to Rs 9,000 for e-two-wheelers.

Tata Motors has reduced price of electric Tata Tigor by up to Rs 80,000 across its variants, with effect from August 1. Mahindra Electric's eVerito will come down by Rs 80,000 and cost of Treo three-wheeler will go down by up to Rs 20,000. Hero MotoCorp-backed Ather Energy also announced a price cut of Rs 9,000 on its flagship model Ather 450.

“In light of the recent announcement made by the government to slash the GST rate for all electric-powered vehicles from 12 per cent to 5 per cent, the price of Tata Motors’ EVs will be reduced by up to Rs 80,000, starting 1 August 2019,” said Shailesh Chandra, president, Electric Mobility Business and Corporate Strategy, Tata Motors. However, these prices do not include the FAME (Faster Adoption and Manufacture of (Hybrid and) Electric Vehicles) subsidy & TCS," said Chandra.

The EV-making arm of Mahindra & Mahindra - Mahindra Electric also announced price reduction. Mahesh Babu, CEO Mahindra Electric, said “Mahindra will pass on the benefits to customers across our entire product range with immediate effect. This tax cut, along with the strong FAME II policy, will see the adaption rate in EV going up drastically with a boost to India’s last- and first-mile mobility”.

Hero MotoCorp-backed Ather Energy also announced a price cut of Rs 9,000 on its flagship model Ather 450. Currently, Ather scooters are only available in Bengaluru and Chennai, the company is also planning to expand the operations in major cities like Mumbai, Hyderabad, Delhi NCR and Pune, and 30 other cities by 2023.

The price reduction in electric vehicles will attract consumers to consider EVs but will it boost the sale?

Last year, in FY2018, India sold a total of 24,972,788 vehicles across segments including sales of 56,000 electric vehicles (EVs). When, compare the sale figures from FY2016, FY2017 and FY2018, then there is a huge boost in the EVs sales.

According to official data released by the Society of Manufacturers of Electric Vehicle (SMEV), while consumer demand for electric two-wheelers has grown sustainably, FY2018 saw de-growth in the sale of electric four-wheelers whose sales are down year-on-year by 40 per cent.

According to a report by Autocar, in FY2019, total EV sales in India crossed the 7,50,000-units mark and reached a total of 7,59,600 units, meaning triple-digit growth (130 per cent) year-on-year (YoY).

It is clear that Indian consumers are interested in electric vehicles and they are looking for more options. In FY2016 had less electric vehicle options compare to FY2018. Now in FY2019, numerous new vehicles have been announced and more to hit the market. And the GST reduction will surely give a strong boost, expected to see higher EV adoption.