Electric Buses and Public Transport

Why Indian cities are switching to electric buses, how leasing models spread the high upfront cost, and what it takes to make them work.

Buses carry more passengers in Indian cities than any other form of public transport. Many cities are now replacing diesel buses with electric buses.

Why electric?

Cleaner air: no tailpipe emissions, important in polluted cities.
Lower running costs: electricity is cheaper per kilometre than diesel, and electric motors need less maintenance.
Quieter streets.
Energy security: less imported oil.

The cost challenge

Electric buses cost much more upfront than diesel buses, mainly because of batteries. But their total cost of ownership, including fuel and maintenance over their life, can be similar or lower, especially for buses that run many kilometres a day.

The leasing model

Many Indian cities use the gross cost contract model:

A private operator buys and maintains the buses.
The city transport corporation pays the operator a fixed amount per kilometre.
The city collects fares and sets routes.

This spreads the upfront cost over the contract period. Large aggregated tenders, such as those run by the government’s Convergence Energy Services Limited, brought down per-kilometre prices by buying at scale.

Government schemes

FAME schemes subsidised electric buses from 2015.
PM e-Bus Sewa, launched in 2023, supports 10,000 electric buses in smaller cities.
PM E-DRIVE, launched in 2024, supports thousands more electric buses along with other electric vehicles.

Challenges

Payment risk: operators worry about delayed payments from financially weak city transport corporations. Payment security mechanisms help.
Charging infrastructure at depots and power supply.
Battery life and replacement costs.
Heat and range: air conditioning in hot weather reduces range.

The bigger picture

Electric buses help only if cities also expand bus fleets, since many Indian cities have far fewer buses per person than recommended. Better bus service can reduce car use and congestion.

The city fleet

A city replaces 300 old diesel buses with electric ones leased under a gross cost contract. It pays the operator per kilometre, saving on fuel costs. Passengers enjoy quieter, air-conditioned rides, and air pollution along main routes falls.

Thinking electric buses are always more expensive

Upfront costs are higher, but lower fuel and maintenance costs can make lifetime costs similar or lower.

Key takeaways

Electric buses cut pollution, running costs and oil imports.
High upfront costs are spread through gross cost contracts paid per kilometre.
Aggregated tenders and schemes like PM e-Bus Sewa and PM E-DRIVE support adoption.
Payment risk, charging and battery costs are key challenges.