First of its Kind Auction Brings Down the Cost of Operating Electric Buses Close to Diesel

Tata Motors emerged as the lowest bidder in all five categories of electric buses


Convergence Energy Services Limited (CESL), a wholly-owned subsidiary of Energy Efficiency Services Limited (EESL), announced that its tender for operating 5,450 electric buses has resulted in the lowest-ever prices. The prices are similar to or very close to the operational cost of diesel buses.

The lowest bid offered for operating a 12-meter bus was ₹43.49 ($0.56)/km, ₹39.21 ($0.51)/km for a 9-meter bus, including the expenses for charging the buses.

According to CESL, the prices discovered were lower by at least 15% to 48% than the lowest prices discovered in the past.

The prices discovered are for electric mobility as a “service,” a relatively new and emerging business model, making it affordable for state transport undertakings to adopt electric buses.

Tata Motors emerged as the lowest bidder in all five categories of electric buses across the five cities.

CESL had issued the tender under the ‘Grand Challenge’ program to select bus operators for the procurement, operation, and maintenance of 5,450 electric buses, 135 double-decker electric buses, and allied electric and civil infrastructure on gross cost contract.

The Grand Challenges tender aims to homogenize the demand for electric buses, encouraging smaller cities in India to adopt modern public mobility. EESL promotes electric transport as a service, considering the high fuel prices.

The estimated cost of the tender is ₹500 million ($6.52 million). The buses will be deployed in Kolkata, New Delhi, Bangalore, Hyderabad, and Surat.

The selected bidders would supply buses under the operating expenses (OPEX) model with an annual assured bus kilometer of 70,000 km per bus for 12 years for 12 m and 9 m buses. The buses will be in operation for 12 years or 10,000 km, whichever is earlier. The minimum fleet availability factor will be 95%.

The electric buses will help mitigate 3.31 million tons of carbon emissions by running at least 4.71 billion kilometers in 12 years and would save 1.88 billion liters of fossil fuel.

The tender is likely to generate 25,000 employment opportunities, including 10% jobs for women. This excludes the new employment opportunities created through new manufacturing facilities.

The Central Government will extend the subsidy to the electric buses under the remodeled Faster Adoption and Manufacturing of Hybrid and Electric Vehicle (FAME II) program administered by the Ministry of Heavy Industries. The low prices will also lead to savings of a national subsidy of approximately ₹36.1 million ($4.71 million), which can be further utilized in additional buses.

Last June, the Central Government initiated the homogenization process in which nine cities were selected for subsidies under the FAME II program.

The wholly-owned subsidiary of EESL had also invited bids in December 2021 to empanel vendors to lease 1,000 electric four-wheelers for various government departments.

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