India should focus on EVs not hybrids: BMW's Jean-Philippe Parain

India should directly transition to battery electric vehicles as the country can achieve more if the focus is on one technology, according to Jean-Philippe Parain, senior vice president, Region Asia Pacific, Eastern Europe, Middle East and Africa, BMW Group.

“It’s extremely important that the biggest incentives should be for EVs as it involves a mindset change for the customer...Plug-in hybrids can be a transition technology to electrification in some use cases where a customer needs to travel longer distances without range anxiety,” Parain says.

BMW has plug-in hybrids in its portfolio but those cars are not currently sold in India, which taxes hybrid cars on par with regular internal combustion engine vehicles at 48%.

BMW’s global electric vehicle sales grew 34% to around 180,000 units in the first half of 2024. This comes at a time when many of its rivals are seeing a slowdown in EVs. “We have seen our competitors struggling with the EV transition,” says Parain.

EV adoption globally has been slower than expected due to shrinking subsidies, explains Parain. “For sure the EV adoption will grow but the pace will remain a question mark for the future,” he says, adding that this transition will be a marathon and not a sprint.

“The adoption of EVs is linked to a state’s policies. In some markets, subsidies are being reduced due to budget constraints. In markets like Australia, where subsidies have been increased, we aim to go from 3% penetration in 2023 to 27% in 2025,” says Parain.

On the 5% Goods and Services Tax (GST) on EVs in India, one of the fastest growing markets for BMW, Parain says the taxation on EVs in India is beneficial. "Cars are more expensive in India than in Europe. When there is a way to buy a superior product at a more competitive price that customers are paying outside India, then they go for it," he says.

BMW plans to fuel EV demand through investments in charging infrastructure.

However, the carmaker wants to keep its options open. "We are not betting only on BEVs. We are trying to keep investments in combustion engines. We also have plug-in hybrid vehicles and we are even thinking about hydrogen. We are trying to remain as flexible as we can be,” he says.

While luxury car sales faced headwinds in the first six months of 2024, BMW was able to maintain its lead over Germany’ top premium carmakers including Mercedes-Benz. “Many traditional competitors of BMW saw their volumes decline in the first half of the year. At BMW, we also experienced a much tougher market but we could post a growth of 2.3% in sales of nearly 1.1 million cars. We have relatively good performance than our direct competitors. We are the leader in the premium segment and have extended our lead significantly to Audi, Mercedes and Tesla,” says Parain.

The German automaker, however, has been impacted by the ongoing slowdown in China. “We are impacted by what’s happening in China. That’s the big headache of all OEMs. Carmakers have seen a drop in sales of premium cars in China. The sentiment is relatively negative there. Our sales are decreasing there but we are doing better than competitors,” says Parain.

Big export countries like Korea are also suffering from what’s happening in China and ASEAN countries which were profiting a lot from investments from China in their countries are also suffering, he adds.

As a result, BMW is cutting down production in China. “I don’t think that’s going away so quickly. We were expecting some stimulus from the government in China. While the consumer sentiment is recovering a bit, the recovery will take a while. The real estate market is affecting the sentiment there,” he says.