EESL to lose hold in e-car procurement for govt with entry of new rival

Draft policy suggesting use of GeM portal to aggregate green vehicle orders from govt depts likely to be approved soon

Energy Efficiency Services Ltd or EESL, which is in the process of buying 10,000 electric cars from Tata Motors and M&M through the biggest tender for electric vehicles, may soon have to compete with another player. The draft auto policy has suggested use of the government e-Marketplace (GeM) portal to aggregate all green vehicle orders from government departments to enable bulk procurement. Besides electric vehicles hybrids also fall in the green segment though it attracts a much higher tax. 

The draft, which will soon receive a stamp of approval from the government, seeks to mandate a minimum share of green vehicles among the new vehicles purchased by central and state government agencies and municipal corporations. It states that by 2023, at least one-fifth of the new vehicles procured by central and state governments must be green. By the same year, 50 per cent of all vehicles procured by municipal corporations in metros must run on green technology. By 2030, the share of green vehicles for central and state governments is proposed at 75 per cent and the same for municipal corporations is pegged at 100 per cent. 

The draft says GeM should aggregate all green vehicle orders from government departments, with standard specifications and enable bulk procurement. EESL, a company floated by central power sector public undertakings, also plans to cater to demand from central and state government departments. 

EESL, however, said it welcomes more players in this space. “We welcome the decision to have targets for government departments. There are many ways in which these vehicles can be procured.  It is not necessary that EESL alone deals with bulk electric vehicle demand from government agencies. A single entity doing the procurement is not a good idea. There should be flexibility to the buyers,” said Saurabh Kumar, managing director, EESL. 

The GeM has already listed e-car as a new product on its portal that sellers can list. GeM was launched by commerce ministry in August 2016 was a technology driven platform to facilitate procurement of goods and services by various ministries and agencies of the government. It claims to have processed orders valued at over Rs 48 billion since then. 

Kumar estimates that the central and state government departments will purchase over a million e-cars over next few years and that is a big opportunity. EESL has recently tied up with the Andhra Pradesh state government to provide 10,000 e-cars by March 2019. However, these will not be outright sales to the state government. 

EESL will lease out these vehicles at a monthly lease fee of Rs 20,000 per car without the driver. These 10,000 e-cars will be supplied to EESL by Tata Motors (e-Tigor) and M&M (e-Verito) with each priced at Rs 1.16 million. EESL has a three-pronged model for e-cars- a wet lease (car along with a driver) at Rs 40,000 a month, a dry lease (only e-car) and outright sales. Besides Andhra Pradesh, EESL is also leasing out e-cars to some government departments in the national capital.