The Chief Executive Officer ( CEO ) of Mercedes-Benz India has raised concerns over the potential Goods and Services Tax ( GST ) hike on high-end electric vehicles ( EVs ), suggesting that it may hinder the growth of the luxury EV market. Mercedes India CEO Santosh Iyer expressed that increasing GST on EVs priced above ₹40 lakh from 5% to 18% would directly impact consumer demand and slow the transition to electric mobility.
The moment cars become more expensive, there will surely be an impact on our sales. EV growth depends heavily on government incentives, not just in India but globally. Decarbonization is a long-term goal, and any policy changes that make EVs less affordable could hinder progress, he said during an interview.
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Mercedes-Benz currently offers a lineup of six EVs in India, including the EQA SUV, EQB SUV, EQE SUV, EQS SUV, EQS 580 sedan, and Mercedes-Maybach EQS 680 SUV, with plans to launch the EQG SUV early next year.
The company recently reported a growth of 84% in battery electric vehicle ( BEV ) sales in the January-September 2024 period, totaling 800 units, which marked the highest growth among luxury car brands in India. Despite this success, Iyer noted that the proposed tax hike could limit future growth.
However, Iyer cautioned that a significant GST increase could create a financial barrier for consumers, potentially reversing the current trend of rising EV adoption.
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The German luxury carmaker, which posted a 13% year-on-year growth in sales, reaching 14,379 units in the first nine months of 2024, sought to remind the need for stable government policies to support the ongoing energy transition.
Iyer concluded that sudden tax increases could impact the affordability of luxury EVs and the broader goals of reducing carbon emissions and transitioning towards sustainable mobility.
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