The Road Ahead for Private Electric Buses in India.
Private stage carriage bus operators across the country ferry 150 million people daily! With most of them operating in the non-urban sector, these operators provide critical and affordable public transport linkages across the regions. However, the rising fuel (diesel/ CNG) prices significantly threaten their current business. This issue brief finds that non-urban e-bus operations are more profitable than diesel bus operations over the duration of the life of the bus. It highlights that the high cost of finance remains a major deterrent to e-bus adoption. Additionally, other concerns like limited e-bus designs, its robustness and longevity, lack of charging infrastructure, and poor know-how of the maintenance ecosystem are highlighted by operators. In addition, the study recommends institutionalising this fragmented market, to ease convening, aggregation, and upskilling.
Project Description:
Key Highlights
1. Under prevailing loan conditions, 95 per cent of e-bus owners will face significantly higher challenges than diesel bus owners, during the loan repayment period of 4-7 years.
2. Mofussil routes, less than 120 km across the plains (terrain), are profitable for standard 12 metre (12m) long and midi 9 metre (9m) AC e-buses.
3. Longer routes (greater than 120 km) are not profitable for operating e-buses if vehicle utilisation is less than 400 km per day. Current bus models' battery capacities are insufficient for longer route lengths.
4. Both mofussil and long hilly routes are profitable for 9m e-bus operations. E-buses on hilly routes have significantly lower cost per km (CPKs) than diesel buses, due to downhill regenerative braking.
5. For the uptake of e-buses in the private bus sector, the study recommends incentivising through interest rate subvention at 4-6 per cent for a loan term of seven years and hypothecation of e-buses.
6. It also recommends creating leasing markets for e-buses by nudging financers, Non-banking finance companies (NBFCs) and other banking institutions.
Recommendations
Four levers to usher e-bus adoption in the non-urban sector:
a) Incentivise e-buses with lower rate of interest
Private stage carriage operations remain an important segment of the affordable public transport system. Subsidies or incentives can be limited with sunset clauses.
The government must arrange e-bus loans at a lower interest rate of 4-6% for a longer tenure of 7 years, to continue its support.
These funds can be channelled through green financing, multilateral development institutions and banks. The move will cause the least upfront burden for the exchequer and shall help in decarbonisation of the majority of stage carriage bus sector.
b) Legalise permits for leasing models
The Union government must nudge the financing institutions to offer the e-bus on a leasing model, along with initial subsidies. The financers can lease buses, with insurance, maintenance, and battery replacement(s), for a minimum of nine years. Although, they may require some risk-hedging mechanism. Under the arrangement, operators can bear the staff, permit and energy costs, thus sharing profits.
However, the state government(s) must legalise transferable permits to recognise lease models where different entities may provide ownership and operations.
Regional transport authorities (RTAs) must consider allowing different trip scheduling and an extra service operation time of 2-3 hours to compensate for time lost in opportunity charging.
c) Materialise affordable and accessible charging and parking
Generally, non-urban routes are longer and require fast charging at terminals, else round trips are unlikely. We find that charging costs for private operators must be capped at INR 11 per kWh to make e-bus operations viable (in comparison to diesel).
Government must fast-track the planning, siting and erection of HDV charging stations through power distribution companies (DisComs) or a Special Purpose Vehicle (SPV) with charge point operators (CPOs).
Institutionalise private operators to convene, negotiate and upskill
E-bus technology is developing. Operators need more information, customised products, accessible after-sale services and skills for operating e-buses. The government must strengthen and recognise private operators' cooperatives or unions to create a platform.
The platform would aggregate e-bus demands, empowered to negotiate with financing institutions, regulatory agencies, CPOs and OEMs for product designs.
The platform would convene skilling institutions to impart the knowledge required for upskilling their crew and staff and collaborate R&D with OEMs and academic institutions.
The findings from the study provide e-bus financial planning for non-urban mofussil and long routes based on the ‘e-bus viability tool’. It includes product insight into required bus models and battery sizing for OEMs. Financing institutions can use these findings for developing e-bus lending portfolios and leasing contracts. These findings can support governments in establishing effective incentives, regulatory mechanisms, and policy provisions to help accelerate e-bus adoption amongst private operators.
