Electric buses (e-buses) are expected to be at the forefront of India’s electrification drive, with the segment expected to witness healthy traction going forward, said ratings agency ICRA.
ICRA expects e-buses to account for 8-10 per cent of new bus sales by FY2025.
“The traction in the e-bus segment is already visible over the recent months, despite the overall stress in the public transportation segment in the past year-and-a-half due to the Covid pandemic,” the ratings agency said.
Besides, ICRA pointed out that the extension of the ‘Faster Adoption and Manufacturing of Hybrid and Electric Vehicles’ (FAME) scheme by two years to April 2024 would support adoption in the segment over the medium term.
Globally, the e-bus market is dominated by China, which accounts for 98 per cent of the global e-bus fleet, and 95 per cent of the global stock of dedicated bus chargers.
“An organised, collaborative approach towards electrification with involvement of all the stakeholders and significant government subsidies aided electrification in China, especially over the 2015 to 2017 period, after which subsidies were gradually phased downwards,” ICRA said.
“Electrification in other geographies like Europe is also picking up gradually. In India too, significant incentives and subsidies have been announced through various schemes like ‘FAME’, ‘Smart Cities’ etc. to reduce cost of acquisition, and spur e-bus adoption, while many state EV policies have announced specific electrification targets and timelines for buses, thereby helping create a roadmap for electrification,” it added.
The ‘FAME II’ scheme implemented by the Department of Heavy Industries (DHI) has planned a significant outlay of Rs 35 billion towards supporting e-bus adoption in India.
According to Srikumar Krishnamurthy, Vice President and Co-group Head, ICRA Ratings: “Bus costs are the single largest cost element in electric bus projects, accounting for 75-80 per cent of project costs.
“With the capital subsidy of Rs 35-55 lakh per bus under the ‘FAME II’ scheme, the capital subsidy element can fund a large part of the project costs, up to even 40 per cent, which augurs well for the viability of these projects.”
Additionally, Krishnamurthy cited that coupled with significant savings on fuel costs, these subsidies help bring the total cost of ownership of e-buses on par with CNG buses, and more importantly 20-30 per cent lower than diesel buses.
ICRA said that while the ‘FAME II’ scheme and associated subsidies would support the penetration in the initial years, expectations are that capital costs would reduce with localisation and evolution in battery technology, which coupled with favorable operating economics would support sales subsequently