Electric cars and SUVs to get costlier in Kerala due to road tax hike . The Kerala government has come up with a major revision in road tax for electric vehicles (EVs), which will make them costlier for the buyers. The increase in tax will be applicable only to EVs priced above ₹15 lakh and ₹20 lakh. With electric mobility picking up across the state, this could affect both the existing and potential buyers of EVs. Let’s look into the details of this new tax structure and its implications.
New Road Tax for Electric Vehicles:
Earlier, the state government of Kerala collected a uniform 5% road tax on electric vehicles. Under the 2025 state budget, the state government has levied a new tiered tax structure based on the price of the vehicle. The new rules are as follows:
The electric vehicles which cost more than ₹15 lakh will now be subjected to 8% road tax.
- EVs above ₹20 lakh will attract a 10% road tax.
- Even if the price of an EV is more than ₹20 lakh, it will attract a 10% road tax if it runs on a battery rental scheme.
This move is expected to increase state revenue as Kerala sees a growing demand for electric cars. However, it also makes mid-range and premium EVs much more expensive for buyers.
Why Has Kerala Increased Road Tax on EVs?
Kerala has topped the list for electric vehicle uptake in India so far. Between January and July 2024, more than 10,000 new registrations of electric vehicles were noted in the state, according to VAHAN data. “The rising affinity for electric vehicles is an attestation to shifting towards a cleaner mobility. Given the high-priced electric vehicles making their way to the market now, this may be an even better opportunity to raise more money while sustaining this momentum,” observed the government.
According to officials, this new tax will add another ₹30 crore to the treasury of Kerala. The move will also support the state’s infrastructure development, but the growth of EV sales, especially in the premium segment, might be affected by this hike.
How the Tax Hike Affects the Buyers of Electric Vehicles
As an immediate consequence of the road tax revision, most electric cars and SUVs going to be priced higher in the state of Kerala. Buyers had planned to acquire mid-range and luxury EVs; now the on-road price will increase requiring changes in their budgets.
For example, electric cars that fall in the ₹15 lakh to ₹20 lakh price segment will attract 8% tax. Some of the best-sellers in the segment are:
- Tata Nexon EV– One of the most popular electric SUVs available in India and is a balanced offering of value for money along with features.
- Tata Curvv EV – A stylish, futuristic EV meant for premium buyers.
- MG Windsor – Electric car featuring lots of value, increasing market.
- MG ZS EV – Electric SUV, very dependable with high-mileage capabilities.
- Mahindra XUV 400 – The best competitor that Mahindra has in electric SUVs.
The buyers interested in luxury EVs priced above ₹20 lakh will have to pay a tax rate of 10%. Some of the models include: - BYD Atto 3 – Premium EV with high-end features and long-range battery.
- BYD Seal – Sleek, high-performance electric sedan.
- Mercedes-Benz EQ Series – Luxury EVs from the German brand.
- BMW i4 and iX – BMW’s best flagship electric models with high-end technology.
- Volvo XC40 Recharge – An electric SUV designed in Scandinavian countries, fitted with top-class safety features.
Hence, buyers may lose interest in that category since they must spend a significant amount of money to make a purchase. Finally, the impact on Kerala’s EV policy:
Impact on Kerala’s EV Policy
Kerala consistently encourages electric mobility through incentives, subsidies, and charging infrastructure expansion. However, this tax increase creates a new challenge for the state’s EV policy. While budget-friendly EVs remain unaffected, higher upfront costs may reduce premium EV sales.
On the other hand, the government can introduce compensatory benefits, such as additional subsidies for lower-priced EVs or investment in better charging infrastructure. In case such measures follow, long-term growth in electric mobility in Kerala may continue to be steady.
How This Tax Hike Affects EV Buyers
The road tax hike will largely affect mid-range and premium EV buyers. Affordable electric vehicles will continue to be attractive. However, higher tax rates could lead some buyers to either delay their purchases or opt for lower-priced alternatives to avoid the additional cost burden.
This notwithstanding, the green transport commitment continues to blossom in Kerala. The government will continue to push the adoption of EVs by expanding the charging network and providing support for innovations in electric mobility. As such, despite this tax revision that poses a short-term financial barrier for buyers, the long-term EV roadmap for the state remains promising.
With Kerala unveiling a new road tax for electric cars and SUVs, electric vehicle buyers will now have to pay a higher amount, especially on models above ₹15 lakh and ₹20 lakh. This will slow down premium EV sales but leave the low segment unaffected.
Still, Kerala is ahead of all others in India when it comes to EV adoption. This tax revision’s impact on the state’s electric vehicle market remains uncertain. However, if the government introduces balancing incentives, Kerala may continue leading in electric mobility as a progressive hub.makes to the state’s electric vehicle market is still to be seen. However, if balancing incentives are introduced, Kerala might continue to be at the forefront of electric mobility, still a progressive hub.
