E-bus deployments in Asia: lessons and insights from China, India, Indonesia

Below, a content authored by the Switzerland-based BASE Foundation highlighting the main findings of a recently-held webinar about transition to e-buses in Asia. BASE is a Swiss non-profit and a specialised partner of the United Nations Environment Program (UNEP) that develops and promotes business models and financial mechanisms to accelerate the adoption of climate solutions

The webinar series, ‘Driving the Change: Accelerating Public Transport’s Transition to E-Buses‘ by BASE Foundation explores the winning strategies and real-world triumphs that are empowering cities globally to ditch diesel and embrace a cleaner future.

Following a successful January session exploring eBus implementation successes in Latin America, BASE recently hosted its second session, ‘Learnings and Opportunities from Asia,’ on June 5, 2024.  The second session zoomed in on successful strategies for deploying electric buses at a national or municipal level, showcasing inspiring case studies from the region.

The conversation was led by Francisco Ramirez Cartagena, BASE’s senior electric mobility and sustainable energy finance specialist, with over 15 years of experience in developing economic plans and business models for the adoption of e-buses by public and private operators.

Focus on public transport in Asia-Pacific region

Driven by rapid population and economic growth, the Asia-Pacific region is witnessing a surge in demand for passenger transport. While public transportation plays a vital role in economic and social development, it is crucial to tackle the heavy reliance of the sector on fossil fuels. The Asia-Pacific region currently accounts for over half of global energy consumption and greenhouse gas emissions. Without intervention, projections suggest that by 2030, 75 percent of transport-related energy consumption will be from oil products, leading to a 47 percent increase in CO2 emissions by 2050 compared to 2015 levels. Public transport is considered to be a “low-hanging fruit” for adoption of electric vehicles (EVs) as it offers the largest emissions mitigation potential. EVs provide higher fuel-equivalent efficiency compared to conventional counterparts, which can also contribute to improving air quality in a region responsible for 70 percent of global air pollution-related deaths.

Some of the main barriers to the deployment of electric buses include 1) the typically more complex technologies involved; 2) operational challenges, particularly those related to range, which can vary depending on various factors, such as air conditioning use and passenger loading; 3) higher capital costs; and 4) unfavourable policies and regulations.

Progress in e-bus deployment driven by China

EVs have made significant progress in Asia and the Pacific, particularly in China, where 90 percent of the world’s electric buses are operating. China’s success in this area can be traced back to Shenzhen, which was selected in 2009 to participate in a zero-emissions program to improve its poor air quality. Nine years later, the city became the first in the world to have an all-electric public bus fleet. 

In India, the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME) programmes facilitated the deployment of over 10,000 buses in major cities through innovative financing models. The government agency Convergence Energy Services Limited (CESL) is now leading the ambitious National Electric Bus Program (NEBP), with the goal of introducing 50,000 electric buses across the country by 2030.

Jakarta, the capital of Indonesia, stands as another noteworthy initiative. The city has been making headlines in 2023 as one of the most polluted in the world, prompting efforts to implement cleaner transportation systems. However, the task is immense: only around 4 percent of the 45 million daily passenger trips in Jakarta are made using public transport. Organisations like UNEP and C40 are currently supporting Jakarta’s goal of increasing the public transport mode share to 60 percent and electrifying TransJakarta’s entire fleet by 2030.

To analyse these unique cases from China, India, and Indonesia, three leading experts and researchers joined the panel for insightful conversations. If barriers must be overcome for wider adoption, those case studies provide tales of fruitful implementations and key learnings to scale up this momentum.

India’s E-Buses Programme: A Case for Business Model Innovation – Insights from Mahua Acharya

The transition to electric buses (e-buses) in India marks a significant shift in public transportation, driven by a strategic approach that addresses both economic and operational challenges. Mahua Acharya, heading the Convergence Energy Services Limited (CESL) at the time of India’s FAME programmes, outlined the different pivotal factors that have facilitated this transformation:

1. A centralised programme to aggregate demand: Although transport is typically a state matter in India, a national and publicly-owned company, the CESL, took charge of managing the programme at the federal level. During the first phase of the project, CESL aggregated demand from 5 cities, creating a single, large-scale tender. This approach not only leveraged economies of scale but also ensured transparency in the procurement process.
2. An as-a-service model: State Transport Corporations (STCs), which are the utilities of publicly managed transport systems, are usually financially stressed, hindering their ability to acquire eBuses despite the fact they typically represent lower operational expenses. Therefore, a shift from traditional ownership models to service contracts was proposed. Under this model, buses are procured and operated by private operators, while the STC collects the fares. In return, the STC pays the operating company a per-kilometer fee. This service-oriented approach shifts the financial burden and operational risks away from the utility, allowing them to focus on providing mobility rather than managing assets.
3. A standardised contract: a standardised, long-term (12 years) “infrastructure-like” contract was created with the involvement of 5 cities. Emphasis was placed on standardising parameters, including gender considerations such as mandating a minimum percentage of female drivers, and making key conditions and components bankable. These included, among others, assured kilometres, which is a guaranteed payment for a minimum amount of kilometres in case of low usage, increased volumes and lot sizes, enhanced payment security terms, and the standardisation of charging infrastructure across cities. Defining buses as an ‘essential’ public service is also a key mechanism for the government to use public funds to support or rescue the service in case of problems, and to limit the risk of discontinuation of the service from the private operators.
4. A payment security mechanism: To support bus providers’ loans to expand production, a USD 390 million fund was created by the Indian and American governments, mitigating the risk of uncertain returns while carrying this long-term debt.

As a result, a tender for 5,450 e-buses across the five cities was launched, achieving record low prices—27 percent cheaper than diesel bus offers. This demonstrated the benefits of as-a-Service over traditional purchasing models and underscored the importance of the business model. STCs enjoyed savings of approximately USD 22,000 per bus and per year. Following this success, a second tender for 6,465 e-buses was launched. To date, over 8,000 e-buses have been deployed on Indian roads, and 27,000 have been contracted.

Shenzhen’s Case Study: The Role of Subsidies and Inter-Governmental Collaboration – Insights from Xiuli Zhang

Shenzhen’s transition to electric buses is a compelling example of how strong government will, accompanied by robust financial support as well as clear targets, can drive sustainable development in public transportation. Xiuli Zhang is the China Projects Manager at Energy Innovation, and a post-doctoral researcher at UC Davis Institute of Transportation Studies. Xiuli conducted research projects on electric and diesel bus cost parity in Shenzhen, and road transportation energy and greenhouse gas emissions projections in China, among others. During the event, Xiuli highlighted several key factors that facilitated this transformation:

1. Subsidies and incentives: A comprehensive subsidy program from national and local governments spanned from 2013 to 2020. This initiative began in 2008 as part of a broader effort to improve air quality and showcase the technology. National strategies included subsidies for EV sales, incentives for research and development, and tax exemptions to encourage acquisition.
2. A collaborative model: The Chinese model involved various ministries providing bus manufacturers with technological guidelines and subsidies to support new vehicle development. At the local level, Shenzhen’s government established a New Energy Vehicle (NEV) Leading Group comprising departments overseeing land use, electricity, and subsidies to support different deployment aspects.
3. Manufacturer and operator collaboration: Bus manufacturers offer a lifetime warranty to the bus operating companies, which in turn test the products and provide feedback to improve the technology. Charging services are provided by specialised companies, separate from the operators. Across China, requirements are in place to buy back batteries at their end of life to mitigate pollution from battery disposal.
4. Financial support: Partnering banks offer additional financial support to relieve the burden on operating companies. 

Despite the total cost of ownership for e-buses being over 20 percent higher than diesel buses, subsidies reduced the total cost by 35 percent compared to diesel buses. This means that subsidies covered around 60 percent of the capital expenses for e-buses.

Research indicates that with longer driving distances, long-term operational contracts, and lower electricity prices, e-buses can achieve cost parity with diesel buses without subsidies.

Thanks to this model, which effectively reduced the high capital costs of battery-electric buses, Shenzhen’s fleet has been fully electric since 2017.

Transitioning to eBuses in Jakarta: Determining the Best Approach with the International Council on Clean Transportation (ICCT) – Insights from Francisco Posada

As Indonesia is looking to kick-start its bus electrification journey, the ICCT supported the city of Jakarta in laying the ground for this transition. Francisco Posada is the ICCT Southeast Asia Regional Lead with over 14 years of experience designing and implementing technical assistance projects focused on transport decarbonisation, fuel efficiency, and cleaner vehicles in developing countries. He leads research identifying and addressing key challenges surrounding transport electrification, including infrastructure, policy, and technical considerations. Francisco worked on TransJakarta’s project, for which extensive analyses, starting at the fleet level and then narrowed to the route level, were conducted to assess the financial differences between electric and diesel buses:

Fleet-level analysis: The fleet-level analysis aims to calculate the total cost of ownership (TCO) for current and future electric fleets, considering factors such as contract duration, tax policies, electricity and fuel prices, and identifying potential institutional and policy barriers.

Route-level analysis: The route-level analysis addresses energy consumption challenges for different journeys. By leveraging GPS data, the ICCT identifies the most cost-effective routes to electrify and the most challenging ones. This data is used to generate predictions for e-buses’ behaviour through computational models. E-buses performance can vary significantly based on factors like the frequency of stops, average driving speed, passenger loading, and air conditioning use. A comprehensive route-level analysis reduces the need for expensive pilot programs by providing sufficient data and technical information to ensure confidence in the success of e-buses deployments.

Determining the energy consumption projections enables the assessment of the TCO. In Jakarta, the analysis suggests that:

•  A 15-year contract duration could offer a lower TCO for battery electric buses (BEBs) than for diesel buses. This longer contract period would also allow the government to afford battery replacements needed after eight years of operation.
• Due to lower operational costs, high daily utilisation yields a lower TCO over the years. 
• Essentially, electric buses can repay the capital expenditure over the long run through operational savings.
• Other regulatory measures can balance the costs of diesel and electric buses. For example, removing current diesel subsidies would significantly increase fuel costs and enable TCO parity without a contract extension. Additionally, reducing taxes and fees for electric buses would further lower their cost in the long run.

Key Takeaways From The Panel Discussions:

• Demand Risk and Financial Capacity: The primary barrier to deploying electric buses is not the demand risk borne by operators, but rather the limited financial capacity to fund these buses. Additionally, the banking system’s unfamiliarity with the technology and its benefits can cause reluctance to invest.
• Secondary Markets: Developing secondary markets for electric buses and repurposing batteries can significantly reduce perceived financial risks for financiers, thereby encouraging private sector investments.
• Ideal for Transit Bus Lines: Transit bus lines are ideal for electrification due to their consistent routes. This allows for initial testing on shorter routes before scaling up.
• End-of-Life Schemes: Implementing battery and bus buy-back schemes is very valuable to prevent pollution at the end of the product’s lifecycle.
• Financing Challenges and TCO: Even when private operators have sufficient financial strength to secure financing for e-buses, investments are often deterred by a higher TCO within the standard 10-year contract duration. Behind the number of years, the number of kilometres travelled is the critical element to driving the TCO down. Building technical capacity is crucial for convincing governments to extend contract durations. Enhancing procurement practices, such as including warranties for battery replacements and negotiating critical points in the bus’s lifecycle, is also important.
• Government’s Role: The government’s role is to establish a supportive framework for e-buses, but the most crucial component for enabling electric buses is a viable business model. While subsidies are effective in triggering the market, they are intended to be temporary.
• Charging Considerations: The timing of bus charging is also a significant factor. Nighttime electricity is typically cheaper, but if the infrastructure incorporates solar power, midday charging can enhance cost-effectiveness.