Electric Bus Makers Need To Invest Rs 1 Lakh Crore To Meet Demand, Switch Mobility CEO Says
The National Electric Bus Programme is envisioned to aggregate demand from state transport units
Electric bus makers will have to invest Rs 1 lakh crore over the next five years to meet the states' demand for the eco-friendly vehicles, Switch Mobility Ltd. Chief Executive Officer Mahesh Babu said.
The National Electric Bus Programme, which has a target to deploy 50,000 e-buses across the country, is envisioned to aggregate demand from state transport units.
"Nearly 10,000 buses need to be deployed every year. That would mean a capital investment of 18,000-20,000 crore rupees every year in this segment," the CEO of the electric vehicle arm of Ashok Leyland Ltd. told BQ Prime.
The demand is currently being aggregated by the Convergence Energy Services Ltd., a PSU under the Ministry of Power. The company has already floated two tenders of over 11,000 buses, touted to be the biggest tenders for electric buses globally.
Though there's no definite timeline to float tenders for all 50,000 buses, the companies expect it to happen over the next five years.
Tata Motors Ltd. emerged as the highest bidder in the first tender, while Switch Mobility was the largest beneficiary of the second tender with close to 2,100 units won from a lot of over 6,400 buses.
"The transition is going to be capital intensive as some of it needs to be funded by banks, while (the) rest of it will come from equity," Babu said.
He said priority lending would be needed for the sector if it needs to achieve a bigger scale, besides payment guarantee from the transport units.
The tenders floated by CESL will be executed as per the gross contract model, under which the company that gets the contract will own, operate and maintain the buses along with providing charging infrastructure. The STU will pay the company on a per-km basis.
Getting funds from banks remains a challenge right now as it is linked to past performance of the transport units of various state governments.
The gross contract model is only three years old and it is slowly building confidence that transport units may reduce the gap between the collections and expenses, according to Babu.
Until then, he added, the government needs to provide support through priority lending to scale-up quickly.