India’s electric bus (e-Bus) sector is witnessing rapid growth, with annual sales reaching 3,644 units in FY24, marking an 81% year-on-year increase. According to a report by CareEdge Ratings, e-Buses currently account for just 4% of India’s total bus registrations, but their market penetration is expected to rise significantly, reaching 15% by FY27.
Growing Market and Untapped Potential
Despite India’s growing urban population and increasing focus on sustainability, the country has only six e-Buses per million people, far below the global average of 85. However, recent policy measures and industry advancements indicate a shift toward large-scale adoption. Maharashtra, Delhi, and Karnataka are currently leading in electric bus registrations, with state transport undertakings (STUs) expanding their fleets under the Gross Cost Contract (GCC) model.
Manufacturing and Infrastructure Readiness
India has a robust e-Bus manufacturing ecosystem, with five key players—Tata Motors, Olectra, JBM, PMI, and Switch Mobility—controlling 88% of the market. These companies have an annual production capacity of 40,500 e-Buses and hold a strong order book, with approximately 20,000 units scheduled for delivery within the next one to two years.
Infrastructure development is also accelerating, with charging stations and battery technologies evolving to support widespread e-Bus deployment. The government’s initiatives, such as the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme and PM e-Bus Sewa, have played a pivotal role in promoting e-Bus adoption.
Cost Efficiency Driving Adoption
One of the major drivers of e-Bus adoption is its long-term cost efficiency. While the initial purchase price of an e-Bus is higher than that of a diesel bus, the total cost of ownership (TCO) over 12 years is estimated to be 15-20% lower. Lower fuel and maintenance costs make e-Buses an economically viable choice for both government and private operators. CareEdge Ratings highlights that this financial advantage is expected to further encourage adoption in the private sector, which currently accounts for 90% of India’s bus fleet.
Challenges and Future Outlook
Despite promising growth, the transition to e-Buses faces challenges, particularly the financial health of STUs and concerns over the effectiveness of the Payment Security Mechanism. With India’s goal to replace 800,000 diesel buses by 2030, including 550,000 private buses, addressing these issues will be crucial.
CareEdge Ratings’ Associate Director, Arti Roy, emphasized, “The ecosystem for e-Buses has largely developed in the country. With strong government support and economic viability, the penetration rate is expected to reach 15% by FY27, with sales exceeding 17,000 units annually.”
Industry experts believe that e-Bus adoption will expand beyond STUs, entering inter-city transportation and private fleets as battery costs decline and charging infrastructure improves. Hardik Shah, Director at CareEdge Ratings, noted, “The evolution of business models and solutions for timely payments will further boost the market.”
With supportive policies, improved infrastructure, and growing environmental concerns, India’s public transport sector is on the brink of an electric revolution, setting the stage for a cleaner, more sustainable future.
