After E20 rollout, Govt should now focus on flex fuel vehicles: Toyota country head

One of the key challenges due to gradual increases in fuel blends could be its impact on legacy vehicles, which Gulati said would require retesting and re-homologation each time the blend changes.

“Globally, what is seen is that after you reach a stage, let us say E20 in the case of India, you stabilise that. The automotive industry, Toyota, the government and other stakeholders are in one voice that the way ahead now is clearly the flex-fuel vehicle,” Gulati said.

Currently no carmaker in India sells flex fuel vehicles owing to their higher cost of ownership over their traditional petrol counterparts. However, companies like Toyota have developed models which can run on flex fuel. This has also set up a clash of ideologies over the future of surface mobility, where some carmakers are betting big on pure electric vehicles, whereas some see flex fuel hybrid vehicles as a more pragmatic option.

Making a case for taxation benefits for such vehicles, Gulati said, “With compensation cess going away on September 22, there is difference in GST only on the basis of the size of the vehicles in India. Small cars are at 18 per cent and large cars are at 40 per cent for all the technologies. Only battery electric vehicles continue to sit at 5 per cent slab. For all other clean energy technologies, there will have to be some mechanism that the government will have to think about so that it can create merit-based taxation for clean technologies,” he stated.

Underscoring the need for differential pricing for higher ethanol blends, Gulati cited the example of Brazil, where flex fuel vehicles have proven to be a big hit. “In Brazil, there is a law that says ethanol [E100] should be 33 per cent cheaper compared to gasoline with 30 per cent ethanol blend [E30]. This naturally drives the cost-conscious consumers to choose E100”.

In India, the unilateral move towards a 20 per cent blend of ethanol in petrol (E20) in 2023 had triggered concerns among many car owners, who had flagged a noticeable drop in fuel efficiency, particularly in vehicles sold before 2023, which may not have been designed for such a fuel blend. There were also concerns around potential corrosion of engines due to the blended fuel.

In August, the government termed claims that using E20 petrol—80 parts petrol and 20 parts ethanol—leads to a “drastic” reduction in fuel efficiency in older vehicles as “misplaced”, adding that studies conducted by organisations including the country’s top automobile industry association show that efficiency drop is only marginal, while the blended fuel offers various advantages. The government also sees fuel blending as a crucial strategy for the country’s energy security, boosting farmers’ incomes and environmental sustainability.