Buying an EV in Tamil Nadu Gets Cheaper With Extended Road Tax Exemption

The Tamil Nadu state administration has made a major announcement to favor electric vehicles (EVs). The state administration has extended the existing 100% exemption on the road tax for electric two-wheelers and four-wheelers for a longer period, which ends on 31st December 2027. The announcement has come through the state's recent order. The state's announcement will prove to be a relief for the customers as well as the EV manufacturers, as the number of electric vehicles in the state is gradually rising, though the speed of the rising trend isn't the same for different types of vehicles.

There is a road tax exemption on EVs in Tamil Nadu under the Tamil Nadu Electric Vehicle Policy of 2019. Initially, this waiver was valid until December 31, 2022, but was later extended until the end of 2025. Now, as the 2025 deadline approached, industry organizations and vehicle manufacturers urged the government to extend it. The government accepted this suggestion and extended it by two more years.

Road tax constitutes a significant portion of the total cost of any vehicle. Removing this tax on electric vehicles reduces the initial cost of the vehicle. Electric scooter and compact car buyers, in particular, benefit directly. This decision makes the decision to adopt an EV easier for ordinary consumers, providing a significant incentive for those who were considering purchasing an EV.

This decision benefits not only buyers, but also vehicle manufacturers and suppliers. Projects like EV factories, charging infrastructure, and supply chains typically involve multi-year planning. Short-term incentives increase investment risk. However, companies will now have long-term clarity. New investments and planning will be easier. The local manufacturing and supplier ecosystem will receive support.

According to industry estimates, EV adoption in Tamil Nadu is projected to reach approximately 7.8% by 2025. However, this growth is not uniform across segments. Electric scooters and delivery fleets have seen rapid growth. The passenger car segment is relatively slow. Charging infrastructure outside major cities is still uneven. Issues such as grid upgrades and battery supply chains remain. This road tax exemption does not address these challenges, but it certainly prevents EV adoption from slowing down.

According to government officials, the purpose of this decision is to reduce the purchase cost of EVs for consumers. It also aims to gradually transition away from petrol and diesel vehicles. Promote local EV manufacturing and suppliers. In the long run, it aims to reduce urban air pollution. With this decision, Tamil Nadu joins a select group of states offering full road tax exemption on EVs for such a long period. Currently, this exemption will remain in effect until the end of 2027. The government has stated that it will work separately on other aspects such as charging networks, grid integration, and battery recycling.