Hybrids and EVs power ahead together in India’s auto market: Report

The notion that promoting strong hybrid electric vehicles (SHEVs) would undermine EV adoption is misguided, pointed out the report

Challenging common perceptions, recent data from India’s automobile market shows that hybrid vehicles are not rivals to electric vehicles (EVs) but are instead expanding alongside them. This simultaneous growth suggests that India is likely to maintain a multi-powertrain approach in the medium to long term, according to a report by HSBC Global Research.

Despite incentives offered by key states such as Uttar Pradesh for strong hybrid electric vehicles (SHEVs), battery electric vehicles (BEVs) have also recorded robust sales growth. In FY25, EV sales growth closely mirrored the rise in SHEV adoption, indicating complementary consumer demand rather than substitution.

Source: HSBC Global Research

According to the recent analysis, states offering SHEV incentives have not witnessed a slowdown in EV growth. On the contrary, both powertrain types appear to attract distinct buyer segments, contributing to the overall development of a cleaner mobility ecosystem.

EV adoption has gained momentum with several new model launches over the past six months. Four-wheeler (4W) EV penetration rose from 1.9 per cent in the first half of FY25 to 2.5 per cent in Q4 FY25, reaching 3.2 per cent in the first quarter of FY26 so far. This growth has been driven primarily by the launch of the MG Windsor and Mahindra & Mahindra’s (M&M) new battery electric vehicles (BEVs). Meanwhile, the share of strong hybrid electric vehicles (SHEVs) in total passenger vehicle (PV) sales increased from 2.1 per cent in FY24 to 2.4 per cent in FY25.

The MG Windsor addressed customer concerns about long-term battery replacement costs by offering leasing solutions, while M&M’s BEVs tackled range anxiety with larger battery packs and positioned EVs as aspirational lifestyle choices. These developments indicate that consumers are willing to adopt EVs when the value proposition aligns with their expectations.

Meanwhile, the hybrid share in India’s PV segment rose from 2.1 per cent in FY24 to 2.4 per cent in FY25, reflecting growing acceptance of SHEVs as practical solutions in a transitional phase toward full electrification. Since their launch in late 2022 by automakers like Maruti Suzuki (MSIL) and Toyota, hybrids have primarily gained market share from diesel variants, although the trend plateaued in FY25.

The notion that promoting SHEVs would undermine EV adoption is misguided, pointed out the report.

SHEVs introduced by MSIL and Toyota in September 2022 gained market share from diesel variants during FY23 and FY24. However, hybrid market share stabilised in FY25, as the share of diesel variants remained steady despite various state-level incentives. Looking ahead, the report suggests that upcoming model launches and continued government support will help accelerate hybrid adoption in the near term.

“It’s not a zero-sum game,” the report highlighted. “Incentivising hybrids is helping build a broader clean vehicle base, rather than cannibalising EV growth.”