September 3, 2025

On Monday, shares of Indian automakers Tata Motors and Mahindra & Mahindra (M&M) took a hit amid buzzing reports that the Group of Ministers (GoM) panel is planning to raise GST on luxury electric vehicles (EVs). Tata Motors’ shares slipped 1%, while M&M dropped over 2%. Hyundai also saw a slight fall of 0.2%. This shake-up comes just ahead of the much-awaited GST Council meeting on September 3 and 4, where these proposals will face final approval. The GoM panel recommends hiking GST on electric cars priced between Rs 20 lakh and Rs 40 lakh from the current 5% to 18%. For even pricier EVs above Rs 40 lakh, GST could jump dramatically to 28%, or even 40% if including them in a new luxury goods tax slab! This is a sharp contrast to the current low GST rates aimed at making EVs affordable and boosting electric car adoption. Prime Minister Narendra Modi recently highlighted GST reforms in his Independence Day speech, promising a simpler tax system. Today, regular petrol and diesel cars are taxed at 28% plus up to 22% cess, while EVs enjoy a sweet concessional 5% GST rate to encourage buyers to switch to green rides. So, what’s the fallout? Tesla, Mercedes-Benz, BMW, and BYD—big names in the high-end EV game—might feel the heat. Tesla, which just started bookings in India with Model Y priced around $65,000 (roughly Rs 50 lakh), could see demand cool due to steeper taxes. Domestic players like Tata Motors and M&M mostly sell cars under the Rs 20 lakh mark but worry about the overall impact on EV sales growth. Tata Motors rules the Indian EV passenger car market with a nearly 40% market share, and M&M holds 18%. Luxury foreign players command smaller slices—Mercedes and BMW about 2%, BYD 3%. Tesla has opened showrooms across India but sales are just starting to gain traction. Adding to the drama, auto sales dipped in August as buyers waited to see if prices would spike after these GST changes. Maruti Suzuki, India’s top carmaker, reported an 8% fall in deliveries. Hyundai, Tata, and M&M also saw fewer sales, signaling jitters among customers. With the GST Council meeting days away, investors and car lovers alike are holding their breath. Will the government continue to support EV growth with low taxes, or is a costly tax storm brewing for luxury electric cars in India? Stay tuned! (Disclaimer: Expert opinions and views are their own and don’t reflect those of The Economic Times.)

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Tags: Tata motors, Mahindra & mahindra, Gst, Electric vehicles, Luxury ev tax, Automobile sales,