Two years. That’s how long Nitin Gadkari, India’s transport minister, believes India will take to switch from using fuel-powered buses to electric ones for public transport. Gadkari made this prediction in September.
That’s a bold prediction considering it has barely been a year since India started this transition. According to research think tank Intelligent Transport, there are 170,000 public transport buses in India, ferrying roughly 70 million people daily. The electric bus count, however, is just around 200, with another 170 set to hit roads soon.
This gap is an opportunity for bus makers. India’s electric bus market—which stood at $47.4 million in 2018—is projected to grow at a compound annual growth rate (CAGR) of 37.6% through 2024, according to management consulting company TechSci Research.
The opportunity is also evident in the government’s allocation of funds towards electric buses in March 2019 under its FAME II (Faster Adoption and Manufacturing of Electric vehicle) program. While aimed at driving the adoption of electric 2-, 3- and 4-wheelers, the focus of FAME II’s Rs 8,595 crore ($1.21 billion) budget is clearly on buses. Of the total corpus, Rs 3,545 crore ($500 million)—about 41%—is earmarked to subsidise the purchase of 5,595 buses for various state transport undertakings (STUs).
That’s 7X the budget allocation and 5,175 buses more than the government sanctioned under FAME I early last year. This massive overhaul was a chance for Indian bus makers like Ashok Leyland, Mahindra and Mahindra, Eicher Commercial Vehicles Ltd, and Tata Motors to cement their leadership. But just like other EV vehicles in the industry, the old guard is being shown up by agile newcomers.
One, actually—Olectra Greentech.
More precisely, Olectra-BYD, an Indo-Chinese joint venture (JV) formed in November 2016. The JV won contracts for 290 buses under FAME I, leaving Tata in second place with 215*. Leyland was a distant third with 40 buses. No other manufacturers won tenders. Incidentally, Olectra-BYD has also delivered the most number of buses since, according to various people The Ken spoke to. As a result, Olectra-BYD controls nearly half the EV bus market, they estimated.
China-based BYD is backed by Warren Buffett and fuelled by state subsidies and bank credit. Not only does BYD account for more than 170,000 of the roughly 380,000 electric buses globally, but it’s also the world leader in EVs overall. This shouldn’t come as a surprise—the ecosystem for making electric batteries barely exists outside China and BYD’s battery manufacturing facility in the Chinese province of Qinghai is the largest in the country (and therefore the world).