EV penetration fastest in luxury car segment: BMW's Pawah

As the domestic automobile manufacturers race against time to achieve the electrification target by 2030, the electric vehicle penetration has been the fastest in the luxury car segment, says BMW India.

Vikram Pawah, President, BMW Group India, in an interaction with Fortune India says that owing to low usage of luxury electric cars and thus limited need to charge them, the adoption rate has been higher in the premium segment. In 2023, the luxury carmaker sold 1,472 electric cars, marking a 325% year-on-year growth.

Pawah says that the company is in line to achieve the target of 30% electrification by 2030. "With the kind of product lineup we already have and the commitment that we will have by 2030 electric cars at every price point. So we will be exceeding the 30% mark," says Pawah.

Pawah, however, opines that for the electric vehicle adoption to get a boost, India would require more charging networks. "For the electric vehicle adoption to grow further, the main challenge is going to be on whether we can have enough charging network across the country because that's where the customers who want to go intercity will need that kind of a framework," says Pawah.

The BMW 7 series manufacturer aims for a 25% EV penetration by 2030. Earlier this month, the company showcased its five electric models—i7, iX, i4 and iX1 at the Bharat Mobility Show. These five models accounted for 10% of the company sales in India in 2023. Of this, the sales of BMW iX's model have remained the highest at 694 units.

Pawah opines that consumers' intention for carbon footprint reduction and usage of solar panels to charge electric vehicles are the two main aspects driving electric vehicle adoption in India. "Other aspect is the cost of running. The cost of running is traditionally cheaper than a traditional engine. So for people who have ease of charging at their home, it becomes an obvious choice," says Pawah.

Notably, unlike its peers, the German car manufacturer is not in a rush to bring hybrid cars in India owing to a high price difference. Hybrids currently attract 43% GST (goods and services tax) as compared to EVs, which are levied 5% GST. "Globally we have plug-in hybrid vehicles, but in India, we haven't brought them because the price differential will be so high that people will not find the benefit. We can introduce it if the customers demand it. But we have seen that customers are not asking for hybrids at the moment, because they don’t see any cost benefits from it," says Pawah.

Meanwhile, the German luxury car maker is planning to introduce 16 new models in 2024 both in the sedan and SUV segment. The company currently has 54% SUVs (sports utility vehicles) and 46% sedans in its portfolio.

In 2023, the German luxury car manufacturer sold 14,172 units, witnessing a growth of 8% year-0n-year. Of this, sales from the company's diesel portfolio accounted for 35-40% of sales, whereas petrol vehicles accounted for 55% of sales. Sales from its electric vehicle portfolio accounted for 10%. Pawah observes that though its diesel sales have been on a decline, it is not disappearing. "We expect that these three technologies will coexist," says Pawah.

Reduction in import duties

The German luxury car manufacturer plans to bring more electric vehicles in India. It is also seeking import duty cuts like its peers. The company currently imports five electric models—i7, iX, i4 and iX1, which attract a 100% import duty.

Pawah observes that for any new technology to be adopted, the barrier between the older technology and newer technology needs to be removed. "Because if it is at a reasonable pricing with the older technology, then people will adapt it quicker. If there are no incentives, then the pricing will be so high that people will not be able to adopt the new technology and then the companies will never be able to localise it and bring the cost down either," says Pawah.

He  alludes that anything that can be done to make sure that electric vehicles are provided at a reasonably cooling price to the customer helps in adoption much quicker. "Then the customer will buy the product based on usage and not in terms of pricing," says Pawah.