From Ashok Leyland’s point of view, well begun is half done.
The Chennai-based truck and bus-maker have kicked off 2019 on the right note as its gears up for its electric bus foray in Ahmedabad. This will be part of the AJL (Ahmedabad Janmarg Limited) Bus Rapid Transit System beginning next month.
Beyond this mandate of 50 Circuit e-buses (comprising 18 swap batteries and 32 fast charging options), Ashok Leyland is also eyeing a ‘selective’ but larger play in Uttar Pradesh, Himachal Pradesh, Delhi and Andhra Pradesh.
The company has readied the blueprint for a five-year EV strategy where ₹500 crore has already been earmarked. “This is the first tranche of investments till March 2020 but is not the end of the story,” says Karthick Athmanathan, Head of EVs and eMobility at Ashok Leyland.
Product development
According to him, a lion’s share of this amount will go in for product and technology development with very little set aside for capacity generation. “Only when the volumes start coming, will we start investing in capacities, which will mean larger sums going forward,” he adds.
The company has developed on its on-the-product integration technology while opting to get the motor or battery technology abroad. “We buy the technology and control it. It is still our technology... just that the work gets done there. We own it, we fund it and we control it,” elaborates Athmanathan.
Ashok Leyland displayed the bus at the recently held Vibrant Gujarat Global Summit in Gandhinagar. The plan for Ahmedabad is to have four routes initially under the EV bus circuit. “We will deploy a few buses initially. A lot of operationalization, training and infrastructure development is happening simultaneously right now,” he says.
Trial runs will begin without passengers to assess key issues like traffic, battery consumption, etc. After about four-five weeks, the actual rollout will begin after factoring in power connections and charging swap stations. Smart chargers will ensure sustained power supply even in the cases of grid fluctuations.
In the process, Ahmedabad will become the first city in the world to offer multiple energy management EVs, overtaking Gothenburg in Sweden, which is synonymous with its Volvo buses. Ahmedabad will also be the first Indian city to have EV buses on a BRTS route.
Himachal Pradesh, however, is the first state to usher in electric buses thanks in part to the Supreme Court directive on pollution concerns. Later Mumbai’s BEST adopted six EV buses supplied by Tata Motors. Yet, it is no secret that this is an expensive and loss-making proposition, which only raises the obvious question on the viability of EVs.
“Right now there is little business sense for anyone because this is going to be too expensive... probably anywhere between 20-100 percent more than the cost of diesel. And that’s how it will continue to be for some time,” says Athmanathan.
Financial concerns
Yet, for companies like Ashok Leyland, what is critical is the first mover ‘active action’ even while there is really no financial benefit to be had. “The business model in terms of financials is not something that we would want to look at today. It will come in 2022 when we start delivering buses,” he says.
By this time, the EV city bus penetration will have picked up and could even account for 20 percent share of overall city bus volumes. “By 2024, this will rapidly go up to reach close to 70-75 percent. And in some cases, it will actually make money sense to scrap diesel buses and switch to EVs,” says Athmanathan.
For battery-operated trucks, financial viability will become a reality after 2024-2025 since they would need superior technology to run batteries for 400-500 km at a stretch. “We have the technology to move a 49-tonne EV but not to give it continuous energy through the day,” he admits.
It remains to be seen if batteries will be subsidized, but if this happens, the industry will more than welcome the move. Apart from this, an investor-friendly business model suggested by NITI Aayog has truly set the ball rolling.
As Athmanathan explains, there is a “very refreshing” tender experience for OEMs in Uttar Pradesh where both the officials concerned and the contract are business-friendly. For the first time, a State Transport Unit will be giving a bankable contract with a payment guarantee.
“You can go to the bank and the banker will fund the project. It is a fantastic contract,” says Athmanathan. Yet, discretion is the name of the game when it comes to working with STUs.
“We are being selective and don’t participate in all the State tenders. Several STUs face issues such as cash flows, management, and administration,” he says. Apart from Ahmedabad, UP has announced a substantial tender for 520 buses in seven cities while there is also a pre-bid announcement from Andhra Pradesh for 100 buses. Delhi is on top of the pyramid with plans to have 1,000 buses.
R&D focus
With so much interest coming in, Ashok Leyland’s R&D team has its hands full with about 160 of its total manpower strength of 1,200 working on EVs alone. The company is maintaining a policy of no-new investments in the form of equity or roping in a partner. “We will invest for product and technology development but not for acquisitions,” reiterates Athmanathan.
India’s EV story is slowly gaining momentum even while China is way ahead along with a handful of European countries. China took eight years to adopt this technology while Norway took nearly twice as long. “Whatever is being done right now in India is enough to drive. We just have to play the game and not expect quick implementation,” declares Athmanathan.
