Though the penetration of electric vehicles (EVs) in the commercial vehicles and passenger vehicles spaces is sub-1%, Girish Wagh, ED, Tata Motors, believes it could go up to north of 25% by 2030. Wagh is equally optimistic about the bus segment, where he expects EV penetration at more than 20%, driven by the growth in intra-city transportation.
Tata Motors has put 640 electric buses on the road so far and they have covered a distance of 2.5 million km, Wagh told FE on Tuesday. He estimates tenders for around 7,000 e-buses have been floated.
Analysts at Bank of America point out electric buses and three-wheeler cargo vehicles are seeing increasing acceptance. In FY22, electric buses accounted for approximately 7% of the overall new bus registrations, albeit on a small base. “The e-bus market is largely driven by government tenders right now,” they said. They also attributed the pick-up in demand to support from large e-commerce companies and predictable routes that provide fixed charging locations.
“We believe EV transition has been set in motion in buses and three-wheeler cargo vehicles, but the key constraints around the supply side and financing persist,” they observed.
Indeed, Wagh warns that demand will collapse if the incentives are withdrawn ahead of volumes reaching a certain threshold. Some states are procuring buses via the Own and Operate model and that has boosted sales. Tata Motors is working with bus service provider BEST and will supply 350 buses under this arrangement.
Industry watchers say the electric bus segment is seeing a fair bit of action. Players like Olectra Greentech, Pinnacle & JBM Auto are doing well and could give Tata Motors a run for its money, though Ashok Leyland has been slow off the block.
Wagh cautioned that range anxiety, charging infrastructure and performance levels continue to worry customers. He believes OEMs are addressing these concerns. Parity between the acquisition cost of electric vehicles and ICE vehicles was expected to take time, he said, though the operating cost of e-vehicles was lower.