A recent report by HSBC Global Research has highlighted a significant shift in India’s clean mobility landscape. Contrary to the common belief that hybrid vehicles compete with electric vehicles (EVs), the report finds that hybrid vehicles are actually complementing the growth of EVs in India. This revelation not only busts a prevailing myth in the automobile market but also underlines how India’s unique multi-powertrain strategy is essential in its transition to sustainable mobility.

According to the HSBC report on hybrid vehicles, India is not following a single powertrain path to achieve its electrification goals. Instead, it is adopting a multi-layered approach involving strong hybrid electric vehicles (SHEVs), battery electric vehicles (BEVs), compressed natural gas (CNG), and biofuels. This diverse portfolio is necessary for a country of India’s size, diversity, and infrastructure limitations.

The report underscores how SHEVs and BEVs cater to different customer segments, thereby minimizing competition between them. For example, SHEVs appeal to customers who are wary of charging infrastructure and range anxiety, while BEVs attract those ready for full electrification and looking for cost savings over the vehicle's lifecycle. Therefore, promoting hybrid vehicles in India does not cannibalise EV adoption—in fact, it drives it forward.

A key highlight from the report is the sales trend in Uttar Pradesh, India’s largest passenger vehicle (PV)-selling state. In FY25, both EV and SHEV sales recorded similar growth in the state, clearly indicating that the rise of SHEVs has not hindered the penetration of BEVs. In fact, the availability of SHEVs might be encouraging more customers to transition away from traditional fossil fuel vehicles by providing a practical intermediate solution.

The electric vehicle growth in India is being fueled by continuous innovation in battery technologies and attractive customer propositions. Take for instance the MG Windsor, which offers a battery leasing model, making EV ownership more affordable. Similarly, Mahindra & Mahindra (M&M) has launched BEVs with large battery packs, effectively addressing customer concerns about range anxiety.

The penetration of four-wheeler EVs has significantly increased, rising from 1.9% in H1 FY25 to 3.2% in Q1 FY26, reflecting the expanding consumer confidence and availability of viable models. This rise is strongly linked to value-driven models that directly tackle consumer pain points, further enhancing EV uptake.

The share of SHEVs in total passenger vehicles climbed to 2.4% in FY25, up from 2.1% in FY24. Brands like Maruti Suzuki India Limited (MSIL) and Toyota Kirloskar have been instrumental in this growth. Their hybrid car models, launched in September 2022, managed to carve a niche and even gain market share from diesel variants during FY23 and FY24. However, this trend has stabilised in FY25 as the market matures.

One of the most encouraging insights from the HSBC report on hybrid vehicles is the complementary nature of hybrid and electric vehicles in India's context. Unlike in Western markets where the conversation often revolves around a choice between EVs and hybrids, India's journey is unique. It requires both technologies to coexist and evolve side by side.

Government support is playing a crucial role in this dual-growth strategy. Many Indian states now offer incentives for SHEVs, just like they do for BEVs. This equal encouragement is creating a balanced playing field and accelerating the growth of clean mobility solutions.

Another advantage of supporting SHEVs and BEVs together is the gradual development of infrastructure. While BEV adoption depends heavily on charging infrastructure, SHEVs act as a bridge technology, helping reduce emissions without demanding full electrification infrastructure immediately. This balance is especially important for semi-urban and rural areas, where charging stations are still sparse.

Moreover, this strategic coexistence is good for the overall market. It diversifies consumer choice, supports automotive innovation, and provides OEMs like MSIL, Toyota, M&M, and MG Motors a robust market to introduce differentiated offerings. For automakers, this means tapping into varied consumer profiles—from the cost-conscious to the environmentally aware and the tech-savvy.

The report also points to the fact that promoting hybrids does not stall the progress of electric vehicles. Instead, it expands the clean vehicle base and creates a stronger case for full electrification down the line. With more customers entering the clean mobility segment via SHEVs, they are more likely to transition to BEVs in their next purchase cycle once charging infrastructure becomes more widespread and reliable.

From an environmental perspective, this multi-powertrain approach is a pragmatic solution. While BEVs are emission-free at the tailpipe, SHEVs also significantly reduce emissions compared to petrol or diesel vehicles. This makes them a valuable ally in India's journey toward net zero carbon emissions.

The Indian automotive market stands at a crucial inflection point. The HSBC report effectively articulates how hybrid vehicles are not threats but allies in the push for EVs. Their presence broadens consumer appeal, offers more immediate solutions for those unable to adopt BEVs, and strengthens the foundation for sustainable transport in India.

In conclusion, India’s clean mobility future is not a question of hybrid vs electric, but of how both technologies can work together to achieve common goals. Hybrid vehicles in India are not hindrances; they are stepping stones towards full electrification. With the right government policies, consumer awareness, and automotive innovation, India can build a sustainable, inclusive, and future-ready vehicle ecosystem that benefits all.

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