Due to the Corona epidemic, the demand for buses has come down significantly, due to which now bus companies are turning to electric vehicles.
The demand for electric vehicles is increasing rapidly in India, which is why all the companies are rapidly producing electric vehicles. Due to the production of electric vehicles, there is a significant reduction in the bus market. If we talk about FY 2021, then the bus market has come down from 80,000 units per annum to 15,000 units. At the same time, it is expected to reach 5,000 units in the first quarter of FY 2022.
Bus companies believe that they may see disappointing performance in the fourth quarter of this year. This is the reason why big companies like Ashok Leyland and Tata Motors are waiting for things to improve before investing. ICRA Vice President Rohan Gupta said that since the existing capacity (built buses) is not being used, new investment will be stopped for at least two years. The only OEMs to invest will be those manufacturing their own EV lineup.
Ashok Leyland to manufacture electric buses and vans
It can be understood in this way that Ashok Leyland’s bus factory in Andhra Pradesh was commissioned in March but the demand for domestic buses fell so fast that the company did not add additional capacity. But on the other hand, it has invested $130 million in its UK-headquartered electric vehicle unit Switch, which will build electric light vans and electric buses for India.
On the other hand, if we talk about Tata Motors, then the company’s CFO P. Balaji admitted that the demand has come down drastically and the company needs to wait a little longer before the situation improves. He said, “We are still not working on capacity expansion in buses and planning to invest in new products as we need to wait for the right time.
Adoption of electric eco-system will take time
The best part about this is that once the threat of a third wave subsides, companies are looking to push bus upgrades into the budget so that it can help. Vipin Sodhi, MD & CEO, Ashok Leyland said that the adoption of electric eco-system will take time and there will still be a combination of diesel and LNG/CNG usage in inter-state and semi-urban/rural areas. Investing for fleet upgradation will help boost demand.
Bus companies say that most of the capacity investment has already been done so there is no real need for new factories. Kamal Bali, President and MD, Volvo Group, said that we already have a lot of capacity and there is no need to increase it till the market picks up. At the same time, experts say that the market is likely to improve after the vaccination drive picks up.
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