10 months ago
EVs vs. Petrol Cars: Analyzing Economics After GST Cuts in India
Deciding between an electric car and a petrol car in India has become more complicated.
Recently, the tax on some petrol and diesel cars was lowered, making them cheaper to buy.
Electric cars still have a very low tax.
Electric cars are cheaper to run because electricity costs less than petrol, and they also need less maintenance.
However, electric cars usually cost more to buy at first.
Whether buying an electric car saves you money in the long run depends on how much you drive.
If you drive a lot every day, the savings on fuel and maintenance can help you make back the extra cost of the electric car in a few years.
But if you don't drive much, it might take a very long time to save enough money.
Also, finding charging stations can be harder than finding petrol stations, especially for long trips.
While the math can work for many drivers, other things like charging convenience and the smooth, quiet ride of electric cars also matter.
Recent GST cuts have made certain petrol and diesel SUVs up to ₹2 lakh cheaper, impacting the economic comparison with EVs.
EVs have a lower GST rate of 5%, while small ICE cars now have a GST of 18%.
The running cost per kilometer for EVs is substantially lower than for petrol cars.
EVs generally have lower maintenance costs due to fewer moving parts.
The total cost of ownership for EVs becomes financially viable over several years, especially for high-mileage drivers, to offset the higher upfront purchase price.
Charging infrastructure availability and longer charging times remain practical considerations for EV adoption.
Repairing EVs can be more expensive and require specialized technicians, though manufacturers offer long warranties.
- Who
- Car buyers in India considering new vehicle purchases.
- What
- An economic comparison of electric vehicles (EVs) versus petrol/diesel cars following recent GST reductions on internal combustion engine vehicles.
- Where
- India, with city-specific cost examples (Mumbai, Delhi).
- When
- Effective September 22, 2025, with ongoing analysis of current market trends.
- Why
- To determine the financial viability of EVs in light of reduced taxes on traditional cars and rising air quality concerns.
Electric Vehicles (EVs)
Petrol/Diesel Cars
Upfront Cost
Electric Vehicles (EVs)
Generally higher purchase price, though GST is 5%.
Petrol/Diesel Cars
Can be cheaper after recent GST cuts on internal combustion engine (ICE) vehicles, with some SUVs becoming ₹2 lakh or more cheaper.
Running Costs
Electric Vehicles (EVs)
Significantly lower due to cheaper electricity and higher per-kilometer savings.
Petrol/Diesel Cars
Higher due to fluctuating petrol and diesel prices.
Maintenance Costs
Electric Vehicles (EVs)
Lower due to fewer moving parts and no need for oil changes.
Petrol/Diesel Cars
Generally higher, especially for diesel cars, due to more mechanical components.
Charging/Refueling Infrastructure
Electric Vehicles (EVs)
Charging infrastructure is growing but not as widespread as petrol stations; home charging is convenient but requires setup. Public charging can be more expensive.
Petrol/Diesel Cars
Ubiquitous petrol pumps make refueling quick and easy, especially for long-distance travel.
Repair Costs
Electric Vehicles (EVs)
Can be higher, requiring specialized tools and technology, though often covered by long initial warranties.
Petrol/Diesel Cars
Generally more common and potentially less expensive for standard repairs.
Usage Pattern Impact
Electric Vehicles (EVs)
Economically viable for high daily mileage to offset initial cost; less so for infrequent use.
Petrol/Diesel Cars
More flexible for varying usage patterns, offering quicker financial recovery for lower mileage drivers.
Key facts
- GST Rate
- EVs: 5%, Small ICE Cars: 18% (previously 28%)
- Running Cost (Mumbai Example)
- Tata Tiago EV: ₹0.61/km vs. Maruti Swift: ₹32,776/year
- Annual Savings (Mumbai Example)
- Approximately ₹27,980 for EV over petrol if driving 150km/week.
- EV Cost Recovery (Outright Purchase)
- Approx. 5.6 years (Mumbai, 150km/week), under 4 years (600km/week).
- EV Cost Recovery (Loan Purchase)
- Approx. 7 years (Mumbai, 150km/week), under 4 years (600km/week).
- Maintenance Savings
- Up to 50% lower for EVs compared to diesel cars.
- EV Appeal
- Near-silent engines, seamless acceleration, premium feel.
Quotes
Udai Shringi
a 53-year-old Delhi resident who has driven an MG ZS EV for three years
“My car has a five-year warranty, and so far, I haven’t faced any repair issues”
livemint.com
“I drive 100 to 140km daily during the week, and my servicing cost is half”
livemint.com
Subhabrata Sengupta
partner at Avalon Consulting
“EV was a little bit more attractive earlier, now the comparative economics has moved a little bit.”
livemint.com
“The decision will come down to your usage pattern and what you’re comfortable with”
livemint.com
Sourabh Sikri
a 47-year-old businessman in Dwarka, Delhi, who bought his first electric car last year
“If you invest in EV and don’t use it a lot, then the whole money is wasted”
livemint.com
“If you don’t have a good running, then no EV”
livemint.com
Sources
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