Government-promoted Convergence Energy Service (CESL) is hoping to roll-out pending schemes worth nearly ₹5,000 crore comprising supply of subsidised electric buses and sale of electric three-wheelers in the next few weeks.
The schemes are aimed at providing further impetus to India’s electric vehicle manufacturing capability including development of battery cell technology by giving a boost to overall demand for electric vehicles.
Rolled-out in October this year, CESL is hoping to issue the tender for 3,472 electric buses where it would provide an aggregate subsidy of ₹1,800 crore. This new initiative called the Grand Challenge aims to create a homogenised demand for buses across nine cities including Delhi, Mumbai, Bengaluru, Hyderabad.
While the tender size under the Grand Challenge is less than 3,500 buses, the actual demand from just the nine cities itself is more than 6,000 electric buses, according to CESL.
Mahua Acharya, MD and CEO, CESL said, “There is money for 3,500 buses under FAME 2 subsidy and the demand for electric buses is a lot more. I expect the total demand for e-buses in the nine cities for which we have the visibility and understanding of operation is over 6,000.”
Each electric bus of 9-meter length roughly costs ₹1.2 crore while a 12-meter bus costs ₹1.6 crore. The average subsidy provided on each bus works out to little over ₹51 lakh. FAME, which stands for Faster Adoption and Manufacturing of Electric and Hybrid Vehicles, aims to expedite EV adoption in India through subsidies.
“I am hopeful that we will find a way to incentivise more than the current lot of 3,500 buses. It depends on how much more funds are allocated to this (programme). But I am also hopeful that through aggregating, if we are able to achieve a price that is the same or very close to the cost of operation then we won’t need a subsidy. We have to get to a point where we won’t need subsidies,” Acharya added.
The CESL subsidy is based on operating expenditure (opex) unlike the capital expenditure-based (capex) base of earlier programmes.
“We have to close the grand challenge and what that means is to close all the unresolved issues as well. We will release the tender after we get clarity on issues like the tender conditions on the subscription model because that is the sticking point. I am hopeful to get it done in the next 2-3 weeks,” Acharya added.
Electric 3-wheelers
Six companies including Mahindra Electric, Kinetic Green and TVS Motor Company are among the ones chosen to supply 1,00,000 electric three-wheelers collectively worth about ₹3,000 crore. These three-wheelers will be sold or leased after applying all applicable subsidies to buyers from various States.
While the three-wheeler scheme was announced much before the Grand Challenge, Acharya admits that there has been a delay in rolling it out. According to Acharya, discussions with non-banking finance companies (NBFC) and financial institutions on this scheme has gathered steam which should help in rolling out the programme soon.
“We found that the financing requirement is a lot bigger than expected and we have a demand that is stacked up in the background for 1,75,000 three-wheelers. While the tender was floated and closed subsequently in the background the demand kept coming in. In about a month’s time, these issues are expected to be resolved,” Acharya added.
There are eight categories in the three-wheeler tender and each category has an L1 bidder. The tender size is not equally distributed within the category since some categories have more demand than the others.