Electric buses to see penetration of upto 13% in new bus sales by FY2025 says ICRA

financialexpress.com:

Electric buses will be at the forefront of India’s electrification drive with the segment expected to witness healthy traction going forwards expects ICRA. 

It estimates that e-buses will account for 11-13 percent of new bus sales by FY2025. The traction in the e-bus segment is already visible over the past couple of years, with e-bus volumes as well as penetration levels improving consistently, to 7 percent in FY2023.

The rating agency says steady progress has been made over this period towards meeting the e-bus deployment targets under the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme, and this is likely to gain pace over the coming months, till the scheme expires in March 2024. Additionally, many state electric vehicle (EV) policies have announced specific targets and timelines for e-bus adoption, thereby creating a roadmap for electrification.

Kinjal Shah, VP & Co-Group Head – Corporate Ratings, ICRA said: “Bus cost is the single largest cost element in the e-bus project, accounting for 75-80 percent of the project cost. The capital subsidy of Rs 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 percent, which augurs well for the viability of these projects. Additionally, coupled with the significant savings on fuel costs (3-5x cheaper vis-a-vis conventional buses), these subsidies help lower the total cost of ownership of e-buses by 10-25 percent compared to conventional CNG or diesel buses.”

ICRA states that in addition to these state policies and government schemes, the government has also sought to spur e-bus adoption through bid aggregation under tenders floated by Convergence Energy Services (CESL). With the enhanced