Electric Buses - a tough road to transition?

The transportation sector in India is still heavily dependent on fossil-based fuels. The emissions from the same are one of the key contributors to poor health conditions amongst the masses and are also responsible for the increasing air pollution in major Indian cities. As per IQ Air, India ranked 3rd on the countries with worst air quality list in 2020, globally. [1] Along with the prevalent health and environmental issues, the increasing fossil fuel prices and India's dependency on crude oil are other areas of concern from the energy security lens.

Solving for these issues, the GoI came up with the National Electric Mobility Mission Plan 2020 (NEMMP) back in 2013 which advocated an aggressive transition towards electric mobility. Under the same mission, famous schemes like FAME - I and II were released. Under both the FAME schemes, e – buses were sanctioned the largest portion of demand incentives and attention by the Ministry of Heavy Industries, which can be accredited to the fact that:

a) The government can have a much active role in deploying them for public transportation systems and

b) ~40% of the motorized trips are accounted by buses in the Indian cities

and hence they naturally have a higher impact towards achieveing the Indian decarbonization goals by 2030. [2] Despite dedicated focus to proliferate the E - buses deployment in India, out of the 6200 odd e – buses sanctioned under the FAME schemes, only 15% of them are running on the Indian roads. We regularly come across headlines claiming that state governments like the Delhi government announced the deployment of 1000 e – buses in the capital city by the end of 2020 along with the procurement of 300 additional e - buses under the FAME – II scheme. But on closer inspection, the 1000 e - buses had to be deployed in 2018 and are over 3 years late with further delays expected due to COVID – 19 situation. So what is causing these delays? Let's look at some key issues identified in the e - bus segment:

The upfront cost of an electric bus

An electric bus costs around ~INR 20 mn as compared to INR 5 – 7 mn for a diesel or a CNG bus. The demand incentive for e – buses are currently capped at INR 5 mn/bus which still leaves a huge gap to fund to purchase these vehicles. This gap is typically plugged by either STUs through their fare revenue collection processes or additional subsidy mechanisms by the state governments, but the reality is that major STUs are typically loss-making entities and there are not enough states that have active funding schemes for e - buses. According to the MORTH’s annual report 2018 - 2019, the cumulative net loss of 55 SRTUs stood at INR 142.13 bn in 2016 - 17. Hence, leaving STUs financially unequipped to provide the high prices quoted by the operators/ suppliers in the absence of support from the local/ city governments, which are in turn scarce. 

Bidder scarcity for e - buses tenders

The tenders released for procurement of these e buses are met with a limited number of bidders, most of the time a single bidder quoting high cost, ultimately leading to the cancellation of the tenders. This can be accorded to the following facts:

• The GCC contracts have stringent qualification criterion, which makes only some of the larger OEMs to participate in an activity they have no experience in (bus operations); majority of the operators do not meet the requirements and have to rely on a collaboration with OEMs to participate in the tender
• Reduction in demand incentives from 60% of the vehicle price to 40% from FAME – 1 to 2 which forces the bidder to generally propose a higher operational cost in order to cover for the high cost of the buses
• Inconsistent approach towards releasing tenders by different SRTUs without taking local city conditions like route planning, weather conditions, and power situation under consideration

Technical know-how

Even if the E - buses are procured, there will be a requirement to develop the technical capacity and understanding of the e- buses operators as also the SRTUs staff from scratch. The functioning of e-buses differs at a fundamental level in comparison to the diesel buses and proper training is key to ensure the smooth operations of e buses as well as minimal maintenance being necessitated over the years.

Geopolitical considerations

With a thrust towards "Aatmanirbhar Bharat" by the current government, there is an enhanced focus towards domestic manufacturers but India is still dependent on countries like China when it comes to e - buses as well as the components required for the EVs.

Almost all of the leading e- buses OEMs in India have a collaboration with foreign manufacturers. There needs to be a systemic and pragmatic approach to increase localization and domestic manufacturing.

What needs to be done?

Though, the initial steps towards E - buses adoption in India by the government has created a much needed demand in the market, a holistic approach is now required to maintain the momentum.

• Revisit the FAME guidelines as well as the GCC contracts in accordance with proper stakeholder discussions conducted with the players closely involved in the bidding process like the OEMs, operators and SRTUs
• Prepare tenders with realistic expectations and appropriate framing of the technical requirements from the buses according to the city conditions
• States and municipalities must come up with additional demand incentives over and above the FAME scheme for faster uptake of e - buses
• Strengthen the Indian bus operators for ensuring proper operation of the buses
• While some state policies are providing manufacturing incentives for domestic OEMs, the terms and conditions needs to be much more inclusive in nature. The same goes with the PLI schemes.This will help in developing a healthy domestic manufacturing ecosystem

In conclusion, India has set a great foundation for introducing electric buses and is going in the right direction with the recent policy updates but it now requires a robust ecosystem development, cooperation at all levels of the government and holistic solutions for all levels of stakeholders involved in the process.  Hope in the coming times, all our public bus transportation will be much greener!