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Favourable ownership economics and the Union government's resolve to decarbonise the public transport sector is set to increase the share of electric buses (e-buses) in India's new bus sales.
It is anticipated to increase from roughly 4 per cent in the previous fiscal year to approximately 8 per cent in the current fiscal year, as per media reports.
Through the National Electric Bus Programme (NEBP) and the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) plan, the central government is actively promoting the deployment of e-buses.
Compared to compressed natural gas (CNG) and internal combustion engine (ICE) buses, e-buses have a reduced total cost of ownership (TCO) due to lower acquisition prices and running costs.
Under the FAME and NEBP initiatives initiated in 2015 and 2022, respectively, state transport undertakings (STUs) have undertaken e-bus procurement using two models: gross cost contract (GCC) and outright purchase. Currently, 5,760 e-buses have been delivered, and an additional 10,000 are slated for deployment in the current and next fiscal years.
The GCC model, featuring favourable contracting terms such as assured rentals, fee revisions linked to inflation, and the absence of traffic risk, has facilitated the adoption of e-buses thus far.
However, several challenges to e-bus adoption exist. High counterparty risk, constrained financial flexibility of STUs leading to an extended debtor cycle, and insufficient battery charging infrastructure for intercity bus operations are noteworthy challenges.
The proposed scheme involves the establishment of a payment security mechanism to secure receivables for OEMs in the event of delayed or failed payments by STUs. The adoption of this scheme by state counterparts will play a crucial role in increasing e-bus penetration.
To date, government initiatives have been the primary driver of e-bus sales, with limited adoption in the private sector. Therefore, the development of a policy framework targeting increased private sector participation, which constitutes approximately 90 per cent of the country's bus fleet, will be essential to accelerate e-bus penetration.
Looking ahead, monitoring policy changes, advancements in battery technology, and the successful implementation of a payment security mechanism will be key considerations in the ongoing evolution of the e-bus landscape.
