The Luxury EV Market in India is Transitioning Quickly

As the automotive world pivots towards sustainability, the transition to electric vehicles (EVs) signifies a leap into the future. However, for aficionados of luxury cars in India, this shift presents a unique set of challenges and opportunities. Leading automakers Tata Motors, MG Motor India, and Mahindra & Mahindra are bridging the price gap between their electric and traditional fuel models, thanks to decreasing battery costs. Yet, the journey towards price parity for luxury electric vehicles (EVs) remains complex, with luxury car manufacturers signaling a longer road ahead.

The High Cost of Luxury EVs

The premium nature of luxury EVs, coupled with their import status that attracts up to 100% tax, significantly elevates their prices. The limited sales volume further discourages local assembly for most models, according to industry executives and analysts. Vikram Pawah, President of BMW Group India, and Santosh Iyer, Managing Director and CEO of Mercedes India, both underscore the technological advancements and the current low volume of luxury EVs as key factors delaying price parity with internal combustion engine (ICE) vehicles.

A Glimpse of Hope

Despite the hurdles, there are silver linings. Luxury EVs enjoy a lower Goods and Services Tax (GST) of 5% and exemption from road tax in some states, enhancing their appeal. This has nudged the EV penetration in the luxury segment to 4% in 2023, outpacing the mass car market's less than 2% penetration rate.

Pioneers in the Luxury EV Space

Among the luxury brands, BMW and Mercedes are making strides in making EVs more accessible. BMW's i7, priced almost on par with its diesel counterpart, and Mercedes' locally assembled EQS, priced lower than the comparable S Class ICE model, showcase efforts to narrow the price gap. This strategic pricing is a testament to the advantages of early entry into the EV market and local assembly.

The Road Ahead

Analysts predict a significant shift towards price parity around 2028, coinciding with the implementation of Euro VII emission norms in Europe, which will likely increase the cost of ICE vehicles. Meanwhile, declining battery prices and increased scale are expected to make luxury EVs more competitive. Puneet Gupta of S&P Global Mobility highlights the potential for broader price parity between ICE and EV models across segments by then.

The Current Landscape and Future Projections

With BMW leading the luxury e-car market in India with a 50% share, the brand's decade-long engagement with EV technology has positioned it favorably against competitors. BMW anticipates that BEVs will constitute 25% of its total sales by 2025, up from the current 10%.

This narrative paints a picture of a luxury EV market at the cusp of transformation. While challenges persist, the concerted efforts of luxury car manufacturers, coupled with favorable government policies, herald a future where luxury and sustainability drive forward, hand in hand.