Mercedes-Benz India says it will sell a full lineup of its EVs in India. The all-electric EQC SUV will be the first to go on sale, starting in April 2020. At a launch event, Martin Schwenk, managing director and CEO of Mercedes-Benz India, said the EQC “will be the first dedicated luxury electric brand in India.”
The move represents a U-turn for Mercedes-Benz, which in November 2019 said it would not launch EVs in India for the foreseeable future. Schwenk previously said that India would be better suited to plug-in hybrids rather than pure EVs.
In December, Mercedes-Benz postponed the introduction of the EQC until 2021. The EV diverted as many units as possible to Europe, which faces stricter CO2 regulations this year.
The economics of luxury electric vehicles in India is challenging. The average purchase price for a gas car in India is about $14,000. Chinese automaker Great Wall Motor recently announced the launch of the Ora R1, which would be the world’s cheapest EV at about $8,500.
According to Indian sources, the Mercedes-Benz EQC 400 will sell in the country for about $140,000. where luxury vehicles are heavily taxed. The 80-kWh EQC is expected to sell in the US starting at $68,000.
According to Bloomberg, only about 8,000 EVs were sold in India in the past six years. “The affordability of electric cars in India is just not there,” said R.C. Bhargava, chairman of Maruti Suzuki India Ltd.
Hyundai introduced the Kona EV at about $35,000 in early 2019, but only sold a few hundred units.
Last year, India’s cabinet approved a program to spend $1.4 billion to subsidize sales of electric and hybrid vehicles to help curb pollution and reduce dependence on fossil fuels. The government set a target in 2017 for all new vehicles to be electric by 2030.
Under the plan, subsidies would be offered based on the battery capacity of the vehicle. The subsidy roughly equates to $140 per kilowatt-hour. The EQC would not be eligible because the subsidy is only available for cars that cost less than about $21,000.
The move by Mercedes-Benz to introduce luxury EVs in China is probably more about PR than a meaningful transition to zero-emission vehicles. After all, Mercedes-Benz last year only sold about 14,000 cars in India.
Meanwhile, as the Trump administration wages a trade war against China, India is trying to lure more automakers to build cars in the country. Mercedes-Benz’s best-selling GLC-Class is assembled in India, and imported to the US. Further investments in India could be a way to escape tariffs.
At the same time, India is trying to reduce emissions from industry and tailpipes. The World Health Organization last year listed India as having the world’s 10 most polluted cities. In 2018, India’s car market surpassed Germany and thereby became the fourth largest in the world. In the next year or two, India could overtake Japan to become the third-largest globally.
At the EQC launch event, Mercedes-Benz India said that the company aims to use 75% green energy at its manufacturing facilities by the end of 2020. Launching EVs in India could only help bolster these eco-friendly ambitions – or at least the public perception that the company is committed to reduced emissions.
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