Electric Bus Adoption in India – Impacts and Investor Takeaways

Electric Bus Adoption in India - Impacts and Investor Takeaways

Analysis of Projected Growth in Electric Bus Sales in India and Its Impacts

Analysis for Layman

The percentage of electric buses in India’s total new bus sales is expected to double to 8% by fiscal year 2024, up from approximately 4% in 2023, according to Crisil Ratings.

Key Terms Explained:

  • Fiscal Year : A 12-month period used for financial reporting, from April to March in India.
  • E-buses: Buses powered by electricity instead of diesel, CNG, or other fossil fuels.
  • FAME Scheme: Faster Adoption and Manufacturing of Hybrid and Electric Vehicles – a government policy to subsidize and support the adoption of electric vehicles.

This growth in electric bus adoption is driven by government policies and the increasing cost-effectiveness of electric buses compared to conventional ones over their lifetime.

Impact on Retail Investors

For retail investors, the outlook on electric bus adoption can impact stocks in various sectors:

Electric Vehicle Manufacturers

Stocks of electric bus makers like Tata Motors, Ashok Leyland, and JBM Auto may benefit as demand increases. Higher electric bus sales will drive up these companies’ revenues, profits, and valuations.

Auto Components

Companies producing components such as motors, batteries, and charging infrastructure like Exide, Amara Raja, and Voltamp Transformers could see increased demand. Rising sales can lead to revenue growth and a larger order pipeline.

Commercial Vehicle Financing

Financiers focusing on funding bus purchases like Shriram Transport, Chola Finance, and Mahindra Finance can gain from increased lending opportunities. More sales, combined with government EV incentives, will drive buyer financing requirements.

Impact on Industries


Indian bus manufacturers will need to enhance their design, engineering, and manufacturing capabilities for electric models to capitalize on the growing demand. Tier 1 suppliers will also invest in localizing components.


The increase in electric buses will drive up electricity demand. Generators like NTPC and PowerGrid may need to enhance supply infrastructure and grids connected specifically to EV charging stations.

Transport & Logistics

Fleet operators like state transport companies will need to train staff to handle and service electric buses, as their operating dynamics differ considerably from diesel or CNG buses. Maintenance practices will require changes to manage battery servicing, etc.

Oil & Gas

Diesel and CNG fuel stations will experience reduced demand progressively as the electric bus population rises, as these buses do not need conventional fuels. Station operators will have to re-evaluate infrastructure accordingly.

Long-Term Benefits & Negatives

Potential Benefits:

  • Lower pollution as electric buses have zero direct emissions compared to conventional buses.
  • Reduced fuel import dependency for India as a shift away from diesel/CNG cuts spending on imported oil/gas.
  • Health benefits and lower healthcare costs over the long term as pollution in urban areas decreases.
  • Growth of an electric vehicle ecosystem encompassing R&D, manufacturing, and charging infrastructure.

Potential Negatives:

  • Significant upfront investments needed to ramp up electric bus production and charging infrastructure, diverting limited capital.
  • Displacement of employment in the diesel/CNG value chain across fuel stations, maintenance, etc.
  • Further stress on power grid infrastructure to meet incremental EV charging loads.
  • Exposure to battery waste and recycling issues as more lithium batteries reach end-of-life.

Short-Term Benefits & Negatives

Short-Term Positives:

  • Immediate expansion for electric bus makers, component suppliers, and connected stocks as sales rise.
  • Increase in lower-emission public transport options for cities in a 2-3 year time frame.
  • Gain in visibility and incentives for mass adoption of electric vehicles across categories.

Short-Term Negatives:

  • Capital expenditure requirements for e-bus capacity investments could negatively impact credit profiles and balance sheets of manufacturers.
  • Significant retraining needs for drivers and service technicians to handle new electric bus tech.
  • Near-term continuation of mixed diesel and electric bus fleets could complicate logistics and maintenance for operators.

In summary, while the transition to electric offers efficiency and environmental gains in the long term, managing the short-term capital and skill transition costs is vital for stakeholders.

Potential Impacts of Doubling E-Bus Market Share in India:

Indian Companies that could gain:

Electric Bus Manufacturers:

  • Tata Motors: Leading player with established e-bus production and strong brand presence. Increased demand could boost their market share and profitability.
  • Mahindra & Mahindra: Another major player actively investing in e-buses. Growing market could benefit their market share and revenue.
  • Switch Mobility (Ashok Leyland subsidiary): Focused on electric buses with strong order book. Increased adoption could lead to production ramp-up and financial gains.
  • Olectra Greentech: Leading e-bus manufacturer with government partnerships. Higher demand could strengthen their market position and generate new orders.

Battery Suppliers:

  • Exide Industries: Major battery manufacturer with plans for lithium-ion battery production. Increased e-bus demand could drive battery sales and boost their market share.
  • Tata Power Company: Diversifying into battery storage solutions, including for electric vehicles. Growing e-bus market could present an opportunity for their battery business.

Charging Infrastructure Companies:

  • Tata Power: Investing heavily in charging infrastructure for EVs, including buses. Increased e-bus adoption could lead to more charging stations and revenue streams.
  • Accel Green Power: Leading provider of EV charging solutions. Growing e-bus market could present expansion opportunities and strengthen their market position.

Potential Market Sentiment:

  • Positive sentiment for e-bus manufacturers, battery suppliers, and charging infrastructure companies due to expected growth and revenue potential.
  • Improved outlook for the electric vehicle sector as a whole, potentially attracting further investments.

Global Companies that could gain:

  • Mining Companies: Increased demand for lithium and other battery metals could benefit global mining companies.
  • Battery Technology Providers: Companies like Panasonic, LG Energy Solution, and Samsung SDI could see increased demand for their battery technologies and components.

Global Companies that could lose:

  • Fossil Fuel Companies: Shift towards e-buses could reduce demand for diesel and other fossil fuels in the long term, potentially impacting global oil and gas companies.

Please note: This analysis is based on publicly available information and does not constitute financial advice. For personalized investment advice, please consult a qualified financial advisor.

Source: ET Bureau, “‘E-buses’ Share in Sales to Double Next Fiscal Year,” December 19, 2023, The Economic Times.

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