Hybrids fuel India’s EV growth, not competition, says HSBC Report
Hybrid vehicles are playing a supportive role in the growth of electric vehicles (EVs) in India rather than acting as competitors, according to a recent report by HSBC Global Research. The report underlines that India’s automotive future will likely remain powered by multiple technologies for the foreseeable future, including hybrids, battery electric vehicles (BEVs), compressed natural gas (CNG), and biofuels.
Rather than cannibalising EV demand, Strong Hybrid Electric Vehicles (SHEVs) are expanding the overall clean mobility market by catering to a different segment of consumers. HSBC noted that the growth of both SHEVs and BEVs is occurring in parallel, especially in states where hybrid vehicles are incentivised. Uttar Pradesh, India’s top passenger vehicle market, saw comparable growth in both SHEVs and EVs during FY25, despite incentives being directed specifically at hybrids.
The report challenges the notion that promoting hybrids will slow EV adoption. On the contrary, it argues that SHEV incentives help create a broader, more accessible clean mobility ecosystem, ultimately encouraging EV adoption. HSBC also pointed out that the recent launch of new electric models has helped accelerate EV penetration across the market.
New offerings from MG and Mahindra & Mahindra have contributed to this trend, addressing key consumer concerns such as battery replacement costs and range anxiety. MG Windsor, for example, introduced leasing options to reduce long-term battery costs, while Mahindra positioned its BEVs as stylish and long-range alternatives.
Hybrid models launched by Maruti Suzuki and Toyota Kirloskar in late 2022 gained market share over diesel variants through FY23 and FY24. However, that shift levelled out in FY25, with the diesel segment’s share holding steady even as states continued to offer hybrid incentives. Still, the hybrid segment expanded its presence, growing from 2.1 percent of total passenger vehicle sales in FY24 to 2.4 percent in FY25.
According to HSBC, upcoming model launches and sustained government support are expected to further increase hybrid penetration while continuing to support India’s broader transition to clean mobility.
