HCV goods

EV adoption in the HCV segment is expected to be negligible in the near future as operational profile makes them
prohibitively expensive. Also, the current charging infrastructure is not suitable for larger batteries of HCVs,
which will render electric adoption unviable for some time.

Passenger vehicles (buses)

Due to the government support through FAME and focus on quicker adoption of EVs in public transport, there
has been significant increase in electric bus sales in the last couple of years. Operational profile of buses with
fixed routes and regular stops make them suitable for charging at pre-determined intervals and specific locations.
However, the electric bus sale is unlikely to meet the target in fiscal 2021 due to the Covid-19 pandemic and hence
CRISIL Research expect the subsidy amount to get carried over to coming years. With other incentives from the
central and state governments, the sales of electric buses is expected to reach 2,500-2,800 units (2-4% of total bus
sales volume) by fiscal 2024.

Electric buses forecast

Buses - Electric

FY19 FY20 FY24
=Bus ® EV Penetration
Source: CRISIL Research
Note: N.M = Not meaningful

There could be some minor penetration in ICVs going forward; however with respect to MCVs and MAVs CRISIL.
Research expect the dominance of diesel fuel to continue with LNG making some inroads.

Regulations in the CV industry
Modalities and timeline of new scrappage policy is not known yet

Recent regulations such as the axle norm, bus body code, mandatory anti-lock braking system, speed governors,
enforcement of BS-IV norms, and mandatory cabin ventilation system on new commercial vehicles (CVs) have
already impacted the industry. We expect the effects of newer fuel-efficiency norms, the proposed BS-VI norms,
the truck body code, and the new scrappage policy, to play out in the long run.

The Ministry of Road Transport and Highways, in August 2018, considered providing incentive for scrapping
vehicles sold before April 2005 (15-year-old). After deliberations on the modalities of the implementation of the
norm, currently, the government aims to promote vehicle scrapping by exempting registration charges for truck
purchases made after scrapping an older truck. As the current registration charges are low (below Rs. ~5,000),
simultaneously, the government also aims to increase renewal of registration for older vehicles (to Rs. 40,000).
Trucks older than 15 years are also expected to get fitness certificate every six month vs. every twelve months
currently. However, we believe Rs. ~40,000 benefit on scrappage of 15 year and older trucks will not be enough
to promote scrapping such trucks as the current resale value of a 15-year-old truck is higher than the current scrap
value and the registration benefit. The move can only aid in scrapping of vehicles which are around 20 years and
above since their resale value will be near the scrap value of the truck; the number of such trucks will however be
limited at ~10,000-20,000.

As seen above, resale value of trucks tends to be above the sum of scrappage value and the registration benefit.

Thus, the scrappage norm at the current level of benefits will lead to scrappage of trucks only older than 20 years.
Through higher incentives from the government and OEMs, if transporters are able to be incentivized for

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