E-bus adoption set to double to 8%, fuelled by policy support

20 Dec 2023 CW Team

The push for e-buses is evident in ongoing efforts to deploy them through tenders awarded under the Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicles (Fame) scheme and the National Electric Bus Programme (NEBP). The report highlights the favourable total cost of ownership of e-buses compared to internal combustion engine and compressed natural gas buses, citing lower operating costs and a reduction in initial acquisition costs.

Under the Fame and NEBP programs initiated in 2015 and 2022, respectively, state transportation authorities have procured e-buses through two models: gross cost contracts and outright purchases. A total of 5,760 e-buses have been delivered to date, with plans to deploy 10,000 in the current and next fiscal years.

The Growth Contracting Conditions (GCC) model, with features such as assured rentals, fee revision linked to inflation, and the absence of traffic risk, has contributed to the successful adoption of e-buses. Sushant Sarode, a director with the agency, emphasises that the growth in e-buses is further supported by favourable ownership economics, estimated to be 15-20% lower than petrol/diesel or CNG buses over a 15-year lifespan, with breakeven in six-seven years.

Despite the advantages, several adoption-related challenges remain. High counterparty risks due to financial constraints of state transport undertakings and inadequate battery charging infrastructure, especially for intercity bus operations, pose significant hurdles. Pallavi Singh, a team leader at the agency, notes that the recently announced PM-e-bus Seva scheme aims to address these challenges, including payment security mechanisms and the creation of a payment security fund for timely payments to operators. The scheme envisions deploying 10,000 e-buses across 169 cities and charging infrastructure in 181 cities.

While government initiatives have largely driven e-bus sales in the public transport sector, the private sector, which represents about 90% of the bus fleet, has been cautious. The development of a policy framework to encourage private sector participation is deemed critical to accelerate the penetration of e-buses.

In the face of lingering counterparty risks and a scarcity of charging stations, the share of electric buses (e-buses) is poised to double to 8% in the upcoming fiscal year, according to a report. The increase is attributed to supportive policy measures and favourable ownership costs. The CRISIL Ratings report underscores the government's commitment to overall decarbonisation, with a particular emphasis on public transport as a key facilitator, coupled with the advantageous total cost of ownership. The report predicts that e-buses will constitute 8% of new bus sales in the next fiscal year, up from around 4% in the current fiscal year. The push for e-buses is evident in ongoing efforts to deploy them through tenders awarded under the Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicles (Fame) scheme and the National Electric Bus Programme (NEBP). The report highlights the favourable total cost of ownership of e-buses compared to internal combustion engine and compressed natural gas buses, citing lower operating costs and a reduction in initial acquisition costs. Under the Fame and NEBP programs initiated in 2015 and 2022, respectively, state transportation authorities have procured e-buses through two models: gross cost contracts and outright purchases. A total of 5,760 e-buses have been delivered to date, with plans to deploy 10,000 in the current and next fiscal years. The Growth Contracting Conditions (GCC) model, with features such as assured rentals, fee revision linked to inflation, and the absence of traffic risk, has contributed to the successful adoption of e-buses. Sushant Sarode, a director with the agency, emphasises that the growth in e-buses is further supported by favourable ownership economics, estimated to be 15-20% lower than petrol/diesel or CNG buses over a 15-year lifespan, with breakeven in six-seven years. Despite the advantages, several adoption-related challenges remain. High counterparty risks due to financial constraints of state transport undertakings and inadequate battery charging infrastructure, especially for intercity bus operations, pose significant hurdles. Pallavi Singh, a team leader at the agency, notes that the recently announced PM-e-bus Seva scheme aims to address these challenges, including payment security mechanisms and the creation of a payment security fund for timely payments to operators. The scheme envisions deploying 10,000 e-buses across 169 cities and charging infrastructure in 181 cities. While government initiatives have largely driven e-bus sales in the public transport sector, the private sector, which represents about 90% of the bus fleet, has been cautious. The development of a policy framework to encourage private sector participation is deemed critical to accelerate the penetration of e-buses.