Electric Buses To Make Up 13% of Sales By FY25: ICRA

According to a new study by the ICRA, electric buses will account for roughly 11 to 13 per cent of new bus sales by the end of the Financial Year (FY) 2025. ICRA also mentioned that this traction has already been witnessed in the past few years as in FY2023, as growth has increased to 7 per cent. 

ICRA says this progress is due to the fact that the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme has been a steady contributor to this development, and this is likely to continue till March 2024 when the scheme expires. Along with this, many state EV policies have also helped in the adoption of e-buses. 

Kinjal Shah, Vice President & Co-Group Head – Corporate Ratings, ICRA Limited, said “ Bus cost is the single largest cost element in the e-bus project, accounting for 75-80 per cent of the project cost. The capital subsidy of ₹35-55 lakh per bus under the FAME II scheme can fund a large part of the project costs, up to as much as 40 per cent, which augurs well for the viability of these projects. Additionally, coupled with the significant savings on fuel costs (3-5x cheaper vis-à-vis conventional buses), these subsidies help lower the total cost of ownership of e-buses by 10-25 per cent compared to conventional CNG or diesel buses.”

The Government of India has also announced the PM e-Bus Sewa, which aims to provide 10,000 e-buses to 169 cities. Convergence Energy Services Limited (CESL) will also help accentuate e-bus adoption through bid aggregation. While earlier, many original equipment manufacturers (OEMs) participated in earlier tenders. The latest tender saw less OEM participation but ICRA says operators with backing from e-bus OEMs will be better placed to establish a strong foothold in the segment.