GST 2.0 Impact on Electric Vehicles: Why EVs Are Getting Expensive

Sep 10, 2025

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Say NO to EV Cars After GST 2.0: Should You Rethink Your Purchase?

The electric vehicle (EV) revolution in India has been gaining momentum, but the introduction of GST 2.0 has shifted the financial equation significantly. With increased taxes on EVs, buyers are facing higher upfront costs, making traditional petrol and diesel cars more attractive in comparison. This article breaks down the impact of GST 2.0 on EVs, pricing comparisons, hidden costs, and why you might want to reconsider your EV purchase today.

GST 2.0 Impact on Electric Vehicles

The new GST regime has increased tax rates on various EV segments. Here’s a detailed view:

EV Type / Segment	Old GST Rate	New GST Rate	Price Impact
Electric Cars < 20 L	5%	12%	Moderate increase in purchase cost
Electric Cars 20–30 L	5%	18%	Significant price rise
Electric 2-Wheelers	5%	12%	Slightly higher prices for EV bikes
EV Charging Infrastructure	5%	18%	Home charger setup now costlier

The higher GST reduces the cost advantage EVs previously had over conventional vehicles, especially in the small and mid-range segments.

Price Comparison: EV vs Petrol/Diesel Cars

Post-GST 2.0, EVs are becoming less competitive in terms of pricing:

Brand	EV Model	Old Price (₹)	New Price (₹)	Petrol/Diesel Equivalent Price (₹)
Tata	Nexon EV	16,99,000	18,99,000	17,50,000 (Nexon Petrol)
MG	ZS EV	21,00,000	24,78,000	22,50,000 (MG Hector Petrol)
Hyundai	Kona EV	23,50,000	27,73,000	22,00,000 (Creta Petrol)

Observation: In many cases, EVs now cost the same or even more than their petrol/diesel counterparts, reducing the financial incentive for buyers.

Hidden Costs of EV Ownership

Even before GST 2.0, owning an EV involved several hidden expenses:

Battery Replacement: Can cost ₹3–5 L after 5–6 years.
Home Charging Setup: ₹50,000–₹1,00,000, especially if electric wiring needs an upgrade.
Resale Value: Lower than petrol/diesel cars due to limited demand.
Insurance Premiums: 10–15% higher for EVs.
Maintenance Costs: Fewer moving parts but specialized services can be expensive.

Challenges with Charging Infrastructure

Charging infrastructure is still limited in India:

Most public charging stations are concentrated in metro cities.
Long-distance travel can be inconvenient due to sparse stations.
Apartment or rented flat residents may face difficulties installing home chargers.

Government Incentives and Subsidies

Earlier, FAME II subsidies made EVs more affordable.
Post-GST hike, these incentives may not fully offset higher taxes.
Some states are revising EV incentives, reducing overall affordability.

Key Takeaways

Cost Comparison: Post-GST, EVs may cost more than similar petrol/diesel cars.
Hidden Expenses: Battery replacement, home chargers, and insurance add to long-term costs.
Infrastructure Limitations: EV adoption is still challenging outside urban hubs.
Government Support: Reduced or capped incentives limit financial benefits.

For now, conventional petrol/diesel cars remain a more practical and cost-effective choice.

FAQs: EV Cars After GST 2.0

Q1: Has GST on EVs increased?
Yes, GST on electric cars and 2-wheelers has been increased from 5% to 12–18%, depending on the segment.

Q2: Are EVs still cheaper to maintain than petrol cars?
EVs have lower maintenance costs for engines but higher costs for battery replacement and specialized services.

Q3: Will EVs become cheaper in the future?
Yes, as battery technology improves and infrastructure expands, EVs may become more affordable in 2–5 years.

Q4: Should I avoid buying an EV now?
If cost, resale value, and charging convenience are your priorities, it is currently better to consider petrol/diesel cars.

Q5: What about government subsidies?
Existing subsidies may not fully offset the increased GST, making EVs less financially attractive.

Q6: Are electric 2-wheelers affected too?
Yes, GST on electric scooters and bikes has also increased from 5% to 12%.

Final Verdict

While EVs are the future of mobility, GST 2.0 has made them less attractive for cost-conscious buyers today. Petrol and diesel cars remain the safer choice for price, convenience, and resale value. Keep an eye on infrastructure and battery technology developments, as EVs may regain their cost advantage in the coming years.