Fuel price hikes drive record demand for EVs, CNG and hybrids

India’s demand for electric, hybrid and compressed natural gas (CNG) vehicles accelerated after the Iran war triggered fuel price hikes, with alternative-fuel models accounting for a record share of passenger vehicle sales in June, according to the country’s auto dealers’ body.

Alternative-fuel vehicles made up 40.35 per cent of passenger vehicle retail sales in June, up from about 38 per cent a month earlier, as buyers increasingly turned to vehicles with lower running costs after petrol and diesel prices were raised several times in May.

“We need to watch whether this is an emotional knee-jerk reaction from customers or whether this growth is here to stay,” C.S. Vigneshwar, president of the Federation of Automobile Dealers Associations (FADA), told Reuters on Monday.

Overall vehicle sales rose 21.8 per cent to a record 2.6 million units, while passenger vehicle sales increased 28.6 per cent year-on-year to 410,853 units.

Among passenger vehicles, CNG models accounted for 24.3 per cent of total sales. Hybrid vehicles made up 8.3 per cent, while electric vehicles accounted for 7.8 per cent.

Industry leader Maruti Suzuki said last month that bookings for its CNG cars jumped 40 per cent since the fuel price hikes.

According to FADA, electric vehicles accounted for 10.6 per cent of overall two-wheeler sales, crossing the double-digit mark for the first time.

While the worst of the crude shock and supply chain disruptions caused by the Iran war appeared to be over, a return to complete normalcy could still take “a few quarters” and may involve some cost implications, Vigneshwar said.