REEVs are equal to EVs and should attract 5% GST: Automobile companies to Gov

Automobile companies are lobbying the Indian government to place range extended electric vehicles (REEVs) under the cheapest slab of the goods and services tax (GST). REEVs are new technology electric vehicles that can get charged via a small fossil fuel-fired engine on board, making them less dependent on an external-plugging power source.

Current GST Structure

Under the GST revision, only EVs and hydrogen-fuel-powered vehicles are placed under the 5% GST slab. Meanwhile, hybrid vehicles and other vehicles running completely on diesel, petrol, and CNG attract 18% and 40% GST.

What are REEVs?

Compared to hybrid and plug-in hybrid EVs, REEVs can achieve a mileage of about 35 km/l, depending on the battery, engine, and type of vehicle. REEVs are often larger vehicles, frequently reaching 4.5 meters in length, which would place them in the 40% GST slab due to the requirement to contain a motor, battery, and engine.

The Bureau of Energy Efficiency's latest draft CAFÉ (Corporate Average Fuel Efficiency) 3 standards announcement, dated September 25, 2025, acknowledges REEVs as being on equal footing with EVs.

Why should REEVs be under 5% GST slab?

Citing an interaction with Ranjan Nayak, Chief Executive Officer, JSW Motors, Moneycontrol reported, “Although REEVs are electric-driven vehicles, ambiguity in GST classification risks place them under higher tax slabs, undermining affordability. The government must classify REEVs under the 5 per cent GST rate.”

The industry group spearheading the push for a lower GST, the Associated Chambers of Commerce and Industry of India (Assocham), asserted that under typical driving conditions, the emission profile of REEVs is comparable to pure EVs and roughly 70% lower than that of internal combustion engine (ICE) vehicles.

At the moment, the only market where REEVs are widely accessible is China. Assocham stated in a letter to the Ministry of Heavy Industries on November 18 that the market share of REEVs in China increased to 13% (from 4% in 2021) and is predicted to reach 16% by 2030, indicating growing customer preference with less reliance on public charging despite a strong charging network presence.

Global Interest and Market Impact

Auto manufacturers like Volkswagen and Stellantis in Europe and the US have taken notice of the spike in demand for REEVs as a possible means of accelerating the growth of EV sales.

The government's GST position on REEV will determine whether or not some vehicle brands may enter the Indian market.