Increasing Adoption of Electric Buses in the Country to Drive Markets Growth

Introduction

With rising environmental concerns globally, the popularity of Indian electric vehicles is increasing. These environment-friendly vehicles work with one or more electric motors and run on the battery's stored energy. The government announced plans to introduce 5,585 electric buses to promote these clean energy vehicles. We are already facing the brunt of disturbing the ecosystem in many ways, and the introduction of such environment-safe transport is becoming a necessity.

Along with the central government, the state government of 26 Indian states and union territories have submitted the proposal requesting 14,988 electric buses. To further promote these efforts, funding of USD 4.6 billion was announced to increase the production activities of battery manufacturers. According to the statistics, around 5 15,600 electric vehicles will be sold in India in 2020. Out of these vehicles, ~600 were electric buses. This is resulting in the immense growth of the EV market in India.

Government of India Promote the Use of Electric Vehicles

The government of India has taken up numerous initiatives to promote the use of EVs. The adoption of these vehicles is massively going to help reduce ozone-depleting emissions. The EVs will further rise because of the increasing urbanization, and international conventions use these clean energy vehicles as alternatives. The government of India has announced that charging station operators for these vehicles do not need a license. They think of it as a service-providing platform, not a place to sell electricity.

The Indian government has even announced tax benefits and subsidies for the manufacturers and customers who utilize them. FAME (Faster Adoption and manufacturing of electric vehicles) is the primary scheme announced to advocate the utilization of EVs. It is under phase two of its enactment as it has received a period of extension after its implementation in 2019. The budget allotted for this effort was USD 1.5 billion. 

The pandemic affected the entire world, and almost all the businesses faced a downfall during this period. The production centers were closed due to the restriction imposed in the wake of COVID-19. In March 2020, when India's government instituted a lockdown, domestic demand in the automotive sector dropped in March 2019. This affected automobile production of all kinds in the world. Moreover, electric vehicles lie on a slightly expensive side than conventional vehicles. Due to the lower spending capacities, conventional vehicles were preferred, which further affected the demand for EVs.

After the chaos and fear of this disease subsided, the manufacturing units are working full fledge and have broadened their production capacities. The sales of EVs have started to increase with the increasing disposable income of the people. The demand will further shoot up during the forecast period due to raising awareness about environmental issues. The EV startups in India were severely hit due to the pandemic, encountering a dilemma whether to continue with the operations or shut down due to lack of funds and resources. The situation is getting under control; significantly, the two-wheeler market will increase over time.

Regional Insights

The Maharashtra government aims to achieve at least 10% of EV registrations out of the total vehicles’ registrations by 2025. They plan to increase their public transport count by 25% in Mumbai, Pune, Aurangabad, and Nashik. They also aim to uplift battery production, making the state a leading producer of battery-driven EVs. According to the statistics by the transport department, the sale of EVs was six times greater in Delhi than in any other region in India. By November 2021, Delhi successfully expanded the demand six times than the national average.

In the northeast region, Tripura accounts for the highest sales. In the financial year of 2021, it was observed that out of every 1000 vehicles sold in Tripura, 57 were EVs. Uttar Pradesh was another leading market for these vehicles, comprising 23% of total sales made in the country. The South Indian region is a top market for electric cars. The new vehicle launched by TATA Nexon EV in January 2021 saw a growth of ~300% in this region. The major markets for electric vehicles were Karnataka, Tamil Nadu, Kerala, and Telangana. The EV market in India is developing gradually and will see a boom in the coming years.

Key Highlights

• The Indian electric vehicles market size is valued at USD 17.01 Billion, and it is predicted to increase at a CAGR of 23.47% from 2021 to 2026.
• The current financial year has experienced a sale of around 57,000 EVs which is ~30% more than the last year.
• FAME (Faster Adoption and Manufacturing of Electric Vehicles) entered its second phase after its successful implementation in 2019. The budget allotted for the scheme is around USD 1.5 billion.
• New Delhi’s EV sales were six times more than that of the entire country.

Competitive Players

Recent Developments

Market News

• In July 2021, Olectra Greentech and Evey Trans Pvt Ltd jointly won the bid for 100 electric buses under the FAME phase two scheme. The company reported that these buses would be used by the state transport and used for intercity purposes.
• In February 2021, Ather Energy moved its manufacturing unit from Bengaluru, Karnataka, to Hosur, Tamil Nadu. This will facilitate the company to increase its two-wheeler production capacity.
• In February 2020, two electric buses models were launched by JBM auto. These buses could run for more than 120 km at a stretch in a single charge.
• In January 2020, to support the e-mobility initiative, the Department of Heavy Industries approved over 2,500 EV charging stations in various states under the FAME phase-II scheme

Segmentation

Indian EV Market: Segmentation

By Vehicle Type

• Passenger Cars
• Commercial Vehicles
• Two Wheelers
• Three-wheelers

By Power Source Type Battery

• Electric Vehicle
• Plug-in Electric Vehicle
• Hybrid Electric Vehicle

By Regions Covered

• North India
• South India
• North-East India