Volvo India Discontinues XC90 Plug-In Hybrid Amidst Unfavourable Policies

Volvo Cars has updated its model line-up for India with the launch of the 2023 Volvo XC40 facelift. Along with the luxury compact SUV, the Swedish carmaker has also announced the prices for the 2023 model year S90 and XC90 mild-hybrid SUV. However, at the same time, the company has also officially discontinued the plug-in hybrid electric vehicle (PHEV) version of its flagship SUV, the XC90. Sadly, Volvo Cars India has said that the unfavourable policies for hybrid vehicles in India mainly influenced the company’s decision to discontinue the SUV. The Volvo XC90 Plug-In Hybrid was first launched in June 2018, and Volvo had even planned to begin local assembly of the SUV. 

Also Read: 2022 Volvo XC40 Facelift Launched In India

Jyoti Malhotra, Managing Director, Volvo Cars India said that the response was good for the XC90 PHEV, but the policy makes conditions favourable for EVs at the moment. It only makes sense then to push electric vehicles. Which is also the global mandate for the automaker. In fact, earlier this year the company launched its first electric vehicle in India, the XC40 Recharge, and plans to bring one new EV every year. Its next EV, the Volvo C40 Recharge is planned to arrive in 2023.

Jyoti Malhotra, Managing Director, Volvo Cars India with the newly launched Volvo XC40 facelift.

Also Read: Updated Volvo XC90 Mild-Hybrid SUV Launched In India

Right now, the taxation on hybrid vehicles is one of the highest in the Indian auto industry, standing at 43 per cent. This includes a Goods and Service Tax or GST of 28 per cent and an additional cess of 15 per cent. In comparison, a battery electric vehicle attracts a tax of about 5 per cent. At the same time, vehicles with internal combustion engines (ICE), attract a GST of 28 per cent and an additional cess that ranges from 1 per cent to 15 per cent, depending on the body type and engine capacity.

So yes, the current policies are certainly unfavourable for hybrid vehicles, and that is also why not many carmakers are introducing self-charging or plug-in hybrid vehicles in India. Plus, with Volvo discontinuing the XC9) PHEV, Toyota and its luxury arm Lexus remain the only brands with hybrid vehicles in the premium and luxury segments.

Also Read: Volvo C40 Recharge Electric SUV India Launch In 2023 

Given the current conditions and policy, Volvo is shifting its focus towards EVs and will launch one new EV every year starting with the C40 in 2023.

Sharing his view on the matter, Avik Chattopadhyay, Founder of Expereal and auto industry expert said, “On the one hand, the government is not convinced about promoting it as a category even as a transition to electric mobility. On the other hand, with mainstream players like Maruti Suzuki and Toyota getting into it with full gusto, the space for a premium / luxury badge like Volvo is totally squeezed. The brand does not have any proposition for its hybrid given it is outpriced. Also, its competitors have not brought in their hybrids, making the Volvo difficult to be benchmarked against.”

Vehicle manufacturers and industry experts have time and again requested the government to reduce the taxes on hybrid vehicles, as they feel it’s best suited for Indian conditions right now as it is not dependent on external charging infrastructure. It is also believed that Hybrid vehicles will aid in the faster adoption of electric vehicles in the future.