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Hybrid cars are quietly gaining traction in the domestic auto market, outpacing electric vehicles (EVs) in sales growth. During the first quarter of FY26, hybrid car sales surged 147% year-on-year to 25,980 units, up from 10,506 units in the same period last year. In comparison, EVs posted a 75% growth to 40,468 units from 23,109 in the year-ago period. Sector experts say the sharp rise in hybrid demand reflects a shift in consumer sentiment, largely driven by recent state-level policy changes which have reduced the effective cost of ownership.
“Demand-side incentives have fuelled the rise of hybrids. With states like Uttar Pradesh already offering registration tax exemptions and Delhi considering similar measures, customers are increasingly viewing hybrids as a transitional technology that strikes a balance between sustainability and practicality,” said Som Kapoor, future of mobility leader- consulting, partner at EY India Automotive.
Increased sales
Uttar Pradesh, after scrapping registration tax on strong and plug-in hybrids in June 2025, has emerged as the biggest growth driver, surpassing Maharashtra in sales of such vehicles, even though the latter remains India’s largest car market overall. Registration tax on strong and plug-in hybrid cars typically ranges from 8-10%. The waiver brings down on-road prices by up to Rs 4 lakh, helping UP increase hybrid sales more than fourfold — from 952 units in Q1FY25 to 4,228 units in Q1FY26.
This growth comes despite hybrids receiving far fewer regulatory benefits than EVs. The GST on EVs is 5% and they also enjoy road tax waivers and state subsidies in most regions. In comparison, only a limited number of states—around a dozen—offer any incentives for hybrids, which are typically lower than those for EVs. Hybrids attract an effective tax rate of up to 43%.
Sector experts say hybrid vehicles appeal to a growing segment of consumers who are still hesitant to fully transition to electric mobility. Concerns about EV range, charging infrastructure and upfront costs remain key barriers. Strong hybrids provide a practical middle ground, offering significantly better fuel efficiency and lower emissions than traditional internal combustion engine (ICE) vehicles, while retaining the range and refuelling convenience that consumers are accustomed to, particularly useful in regions with poor EV infrastructure, said Preetesh Singh, specialist in CASE (Connected, Autonomous, Shared, and Electric) mobility at NRI Consulting & Solutions.“Moreover, with the growing number of hybrid options, customers now have more choices, which is further driving the segment’s growth,” Singh added.
Hybrid adoption is accelerating despite a limited product lineup, fewer than a dozen models from just four automakers: Toyota, Lexus, Maruti Suzuki, and Honda. EV buyers, by contrast, have a much wider selection, with nearly 50 models available across brands such as Tata Motors, Hyundai, Kia, Mahindra, MG, Mercedes-Benz, BMW, MINI etc.
Experts POV
Sector experts acknowledge that while EVs remain central to the country’s long-term clean mobility strategy, the recent uptick in hybrid sales underscores a growing appetite for fuel-efficient, easy-to-own alternatives. As more states like Delhi and Uttrakhand consider policy revisions to support hybrid adoption, the segment is likely to maintain its upward trajectory in the coming quarters.“With more state-level incentives and rising fuel prices, hybrids are poised to play a bigger role in India’s mobility transition over the next few years,” Kapoor said.
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