Toyota’s direct appeal to the government: Will the prices of flex-fuel vehicles reduce soon?

Flex Fuel Vehicles: Amid efforts to promote ethanol-based mobility in India Toyota Kirloskar Motor on Thursday appealed to the Central government to plug policy loopholes that could slow down the pace of the country’s fast-growing ethanol blending programme. During a media visit to Triveni Engineering’s Sabitgarh Sugar Mill, Vikrant Gulati, country head and executive vice president (corporate affairs) of the company, said that flex-fuel vehicles (FFVs) and hybrid flex-fuel vehicles need a different tax structure to make them commercially viable.

High tax burden becomes a big challenge

Gulati said flex-fuel technology increases the cost of manufacturing a vehicle by ₹40,000–₹50,000, while strong hybrid FFVs incur additional manufacturing costs of ₹3 lakh–₹3.25 lakh. After taxes, this cost rises to around ₹80,000 for FFVs and around ₹5 lakh for hybrid flex-fuel vehicles.

“The manufacturing cost of flex-fuel vehicles has increased from ₹50,000 to ₹80,000, and for electrified flex-fuel models it is around ₹4.8 lakh. Of this, around ₹1.8 lakh is unintentional additional tax. We need to restore taxation to the merit regime,” he said. The Japanese carmaker believes strong hybrid FFVs will not only boost the adoption of electric vehicles but also help insulate the country from geopolitical risks such as US tariffs and limited supply of rare-earth metals in China.

Abundant availability of ethanol in India

India currently has a substantial surplus of ethanol, which provides an opportunity for large-scale adoption of flex-fuel vehicles. ISMA Director General Deepak Ballani said that OMCs have promised to buy 1,048 crore liters of ethanol for 2025–26, while production is estimated to be around 1,900 crore litres.

He added, “Even after meeting the industrial demand of 330 crore litres, more than 450 crore liters of capacity will remain unutilised.” In July this year, the Center achieved the target of 20% ethanol blending 5 years ahead of schedule, which is considered a big achievement for the industry.

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Questions on technical risk and efficiency

The industry has accepted 20% blending, but the situation is still unclear regarding taxation, lifecycle carbon accounting and consumer incentives. On concerns about efficiency degradation due to higher ethanol blends, Gulati said that running on E100 reduces the efficiency of the vehicle, so stronger hybrid models are able to provide the best range.

Clean technology needs support

On the recognition of flex-fuel vehicles in the CAFE 3 draft, Gulati said, “All clean technology electric, flex-fuel and electrified flex-fuel are included in the final draft.” He said ethanol’s easy availability, strong supply chain and zero geopolitical risk make it a viable option for India to transition to clean fuel. Gulati concluded, “India is globally competitive in ICE technology. Ethanol not only maintains this ecosystem but also makes it clean.”