Consumers are pretty disappointed with the declarations of 2012-13 Union Budget, a few days back. The government has not only mounted up the excise duty costs on all vehicles, but it has also somehow accumulated the cost of electric vehicles. Firstly, let us make you aware about the positive moves of the government favoring the Electric Vehicles. The manufacturing cost of the lithium Ion batteries and few other components used in the electric and hybrid cars are now discharged from custom duty. Lithium ion batteries have now got the reduced excise duty of 6 percent, which was earlier 10 percent. Moreover, few other specified components of the hybrid vehicles have also witnessed reduction in excise duty, from 10 percent to 6 percent.

Coming to the factors that might be the cause of worry for the electric vehicle manufacturers. Although, the government has reduced the excise duty on the EV components, but on the other hand the basic excise duty on all the cars have been increased from 5% to 6%. Furthermore, there have been hike in excise on parts from 10 percent to 12 percent. Now conclusion is that although, there has been ample of exemptions on the lithium ion battery packs, but other parts utilized by the EV and hybrid car manufacturers have got 1 percent increase in the Countervailing Duty.

By such hikes on the EV, one can easily derive that on one hand the government is stressing on the promotion of EVs, but as far as its purchase is concerned, the government has increased the excise duty in parallel. It is expected that the electric vehicles’ price would now increase by a 1 – 1.5 percent that might hamper its sales too. The government should have considered that curtailing the excise duty on battery is not going to low-down the cost of EVs. The immediate victim of the move will be Reva NXR and Nissan Leaf both upcoming in India.