India's ambitious e-bus drive faces component supply constraints, financing hurdles
India wants to quickly transition to
green public transportation
and has set itself an ambitious target of deploying 50,000 e-buses by 2027. An overwhelming procurement of 90% of these e-buses is to be done by various state governments instead of private operators. But supply chain issues, specifically for components coming from China, continue to be a roadblock in this ambitious plan. There are other challenges too, including access to financing and infrastructure readiness.
Earlier this week, news reports suggested that the Maharashtra government has decided to cancel a large order for supply of e-buses due to inordinate delays in supplies. State transport minister
Pratap Sarnaik
said as much on X, though he did not name the supplier. The contract was signed between the state government and a
Special Purpose Vehicle (SPV)
, which comprises Olectra Greentech and another group company, and it was inked for supply of 5,150
electric buses
to the state government in 2023. Reports suggest that less than 250 buses have been delivered till date and the contract had been revised once earlier, with the supply timelines eased.
So what went wrong? Supply challenges for chassis and battery components have been severely affecting the manufacturing of electric buses, not just for the Olectra SPV but for much of the e-bus ecosystem in India. Another industry player said he was negotiating with a European company for a partnership to enter the 9 metre electric bus segment in India, while pointing out the continued supply challenges for battery and chassis components besides magnets. 'Everybody is getting affected, all major electric bus OEMs are getting affected. China and the USA - major suppliers of some of the components - have been flexing their muscles but I believe eventually, things will get sorted out,' this person said.
We have navigated supply chain challenges through robust planning and favorable geopolitical developments. We rely on trusted partners for important EV components, battery, motors, and power electronics. We closely work and collaborate with partners to manage the challenges.Mahesh Babu
Mahesh Babu, CEO
Switch Mobility
, another electric bus manufacturer with an order book of 2921 units last fiscal (of which 982 had been delivered), said his company has been investing in local battery assembly and in strengthening logistics partnerships to increase localisation and reduce supply chain vagaries. 'We have navigated supply chain challenges through robust planning and favorable geopolitical developments. We rely on trusted partners for important EV components, battery, motors, and power electronics. We closely work and collaborate with partners to manage the challenges. We are also investing in local battery assembly, pursuing long-term contracts with suppliers and strengthening logistics partnerships, with over 65% localization in manufacturing and plans to increase this to 90% aligning with the 'Make in India' vision.'
Also read:
Karnataka to receive 4,500 electric buses under PM e-Drive scheme
Over 90% of e-bus procurement is currently driven by state governments and public transport corporations (STUs), supported by central schemes like FAME-II and new initiatives under PM e-Bus Sewa and
PM e-Drive
.
State governments have no option
But even as different e-bus makers are trying to innovate and also address the supply constraints by developing a local vendor base, there really appears to be little the state governments can do to get the e-bus orders in time! While Olectra says it is yet to receive any intimation about the cancellation of the
MSRTC
order, in a subsequent discussion with analysts, the company's CFO B Sharatchandra did not seem perturbed by the impending cancellation.
When asked whether it was fair to assume that if MSRTC were to cancel the order, there were no competing suppliers who could step up and fulfil the order in the timeline decided, he said 'I think you are right. Yes, you can assume. So, obviously, everybody has got capacity constraints and our product, as you rightly said, has got an edge in terms of technology and in terms of performance over the competition. So, we hope, as Hanuman (company secretary) has clarified to earlier queries, we are optimistic that there will not be any negative impact on account of this'.
In other words, Olectra SPV's loss is unlikely to be a competitor's gain.
The Olectra officials also admitted that delays in procuring powertrain components relating to battery and some of the components relating to chassis have hampered production of e-buses but again alluded to the delays in deliveries of e-buses by the entire industry to drive home the point that supply chain limitations are universal.
The MSRTC order was labelled as one the world's largest e-bus procurements and was worth Rs 10,000 crore. The initial agreement for e-bus supply was later amended to reduce the number of buses to be supplied, due to inability of the SPV to meet the targets.
At present the contract execution is under process and as per the clarification provided by EVEY they haven't received any such order as of now.Olectra Greentech consortium
A consortium of Olectra Greentech Limited and EVEY Trans Private Limited was awarded this contract by the MSRTC for 5,150 Electric Buses and allied Electrical and Civil Infrastructures on Gross Cost Contract (GCC) basis. And that EVEY Trans is executing this contract with MSRTC through the SPV. 'At present the contract execution is under process and as per the clarification provided by EVEY they haven't received any such order as of now.'
Meanwhile, in answer to another question, the Olectra CFO admitted that the company's total backlog was 'quite severe. We have orders of, I think more than 4,500 (e-buses)...pending and another 5,000 with MSRT, which we have to deliver in the next, I believe 18 months'. The company plans to ramp up production by deploying robotics in Q4 of FY26.
Also read:
Electric two wheeler sales cross a million units in FY25 but growth is slowing down
Switch to double volumes
Babu of Switch mobility said that the company's goal was to double volumes and revenue annually over the next three years, supported by a robust order pipeline exceeding 1,800 electric vehicles, including international orders such as from Mauritius. 'We are scaling up production and expanding our service network with 18 exclusive bus service outlets and 50+ dealer points across India.' Beyond battery and motor supplies, Babu listed out some other challenges being faced by the electric bus OEMs: Charging Infrastructure, customization complexity alongside diverse city requirements, shortage of skilled workforce, and access to financing and infrastructure readiness, especially in tier 2 and 3 cities.
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