E-Bus Sales Set to Soar: CRISIL Predicts 80% Increase this Fiscal Year

The Indian electric vehicle (EV) market is poised for significant growth, with e-bus sales expected to increase by 75-80% this fiscal year, reaching 6,000-6,500 units, according to a report by Crisil Ratings. This surge in demand is driven by government initiatives aimed at reducing carbon emissions in public transport and fostering the adoption of e-buses.

Government Initiatives Drive Growth

The Indian government has taken several steps to promote the adoption of e-buses, including the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme. The scheme provides incentives for the purchase of e-buses, including a subsidy of up to 40% of the purchase price.

Gross Cost Contract Model Gains Traction

The Gross Cost Contract (GCC) model has emerged as the preferred route for e-bus procurement by state transport undertakings. This model provides an asset-light approach, eliminating the need for upfront capital expenditure. Instead, the manufacturer or operator provides the e-bus and charging infrastructure, while the state transport undertaking pays a per-kilometer fee. This model has gained traction due to its simplicity and reduced financial burden on state transport undertakings.

Declining Battery Costs to Boost Adoption

Crisil predicts that declining battery costs will lower e-buses' purchase price, potentially benefiting state transport undertakings through reduced rental rates. As battery costs continue to decline, e-buses are becoming increasingly competitive with conventional diesel buses. This trend is expected to boost adoption, as state transport undertakings seek to reduce their operating costs and environmental impact.

Central Government's Initiatives Bear Fruit

The central government's initiatives have led to 24,000 e-bus orders for this fiscal year. This is a significant increase from previous years and demonstrates the growing demand for e-buses in India. The government's focus on promoting e-mobility has created a favorable environment for the growth of the e-bus market.

State Transport Undertakings Lead the Charge

State transport undertakings are at the forefront of the e-bus adoption drive. They are actively seeking to replace their conventional diesel bus fleets with e-buses, driven by the need to reduce operating costs and environmental impact. The GCC model has made it easier for state transport undertakings to adopt e-buses, as they do not have to bear the upfront capital expenditure.

Manufacturers Ramp Up Production

E-bus manufacturers are ramping up production to meet the growing demand. They are investing in new manufacturing facilities and expanding their existing capacity to meet the increased demand. This is expected to lead to economies of scale and further reduce the cost of e-buses.

Challenges Remain

While the outlook for the e-bus market is positive, there are still challenges that need to be addressed. The lack of charging infrastructure remains a major concern, as it can lead to range anxiety among operators. Additionally, the high upfront cost of e-buses, although declining, remains a barrier to adoption.

Conclusion

The e-bus market in India is poised for significant growth, driven by government initiatives and declining battery costs. The GCC model has made it easier for state transport undertakings to adopt e-buses, and manufacturers are ramping up production to meet the growing demand. While challenges remain, the outlook for the e-bus market is positive, and it is expected to play a significant role in reducing India's carbon footprint.