Centre's proposal to extend the regulatory life of eligible clean-fuel commercial vehicles by five years could improve TCO and residual values, but battery costs remain a concern.
Key Points
- The Centre proposes extending the operating life of battery-electric, CNG, and hydrogen vehicles under national permits by five years, potentially increasing limits to 17-20 years.
- Industry players like Olectra Greentech and Statiq believe this extension will improve Total Cost of Ownership (TCO) and residual values for clean-fuel commercial vehicles.
- A longer permissible life could spread vehicle acquisition costs over more years and reduce annualised capital costs by 25-30 per cent for electric trucks.
- Challenges remain regarding the economically useful life of high-mileage trucks, battery durability, replacement costs, and the absence of long-term operating data for electric trucks.
- The proposal highlights the distinction between regulatory and economic life, with actual savings depending on utilisation, maintenance, and battery longevity.
The Centre’s proposal to allow certain battery-electric, compressed natural gas (CNG), and hydrogen vehicles operating under national permits to remain in operation for an additional five years could improve their total cost of ownership (TCO) and residual values, said industry players and experts.
However, questions still remain over how much of the extended regulatory life would translate into economically useful life for high-mileage trucks.
The proposed amendment is specific to vehicles covered by Rule 88 of the Central Motor Vehicles Rules, and is not a blanket extension for all commercial vehicles (CVs).
If finalised, the existing 12-year age limit for goods carriages other than multi-axle vehicles would effectively increase to 17 years for eligible clean-fuel vehicles, while the 15-year limit for multi-axle goods carriages would increase to 20 years.
Industry Optimism and Economic Benefits
"The proposed extension of the operating age for electric CVs is a significant step towards improving the TCO over the vehicle lifecycle. Electric vehicles (EVs) are fundamentally more efficient and have fewer moving parts compared to conventional vehicles, which can support longer and more efficient asset utilisation," said Mahesh Babu, managing director of CV player Olectra Greentech.
"Fleet owners can extract greater value from their assets and can improve the overall profitability and return on investment (RoI) of electric fleets.
"For operators, a longer vehicle lifecycle can further strengthen the business case for investing in electric buses and trucks. For manufacturers, it provides greater impetus to invest in battery technology, vehicle longevity, and lifecycle solutions," he added.
The longer permissible life could help operators spread vehicle acquisition costs over more years and potentially improve residual values.
EV charging network Statiq takes a more positive view of the proposal.
It expects the longer permissible life to strengthen the economics of electric CVs by allowing their higher upfront costs to be spread over a longer operating period.
Statiq estimates that for a typical electric truck with a baseline life of 12-15 years, adding five years could reduce annualised vehicle capital costs by around 25-30 per cent, assuming similar utilisation.
“Longer life improves EV economics relative to internal combustion engine (ICE) alternatives,” said Akshit Bansal, founder and chief executive officer (CEO) of Statiq.
The company also expects the relaxation to support residual values and the second-hand market for electric trucks by increasing the permissible operating life available to subsequent owners.
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Challenges and Unanswered Questions
However, commercial goods vehicles typically clock high annual mileage, raising questions over whether operators would continue using them for the full 17-20 years.
For electric trucks, battery durability and replacement costs could become particularly important.
Battery performance deteriorates with age and usage, while rapid advances in battery and vehicle technology could also affect the attractiveness and resale value of older electric trucks.
Industry sources pointed out that there are currently no 20-year-old electric trucks in the market, making it difficult to assess how such vehicles and their components would perform over the extended operating period.
Battery replacement would also have to be factored into the economics.
Industry sources said a battery-electric truck could require at least one battery replacement roughly every seven years, implying potentially two replacements if a vehicle were operated for close to 20 years.
This could significantly affect the economics of using the additional permissible life, given that the battery is one of the most expensive components of an electric vehicle.
Anurag Singh of Primus Partners said that, theoretically, an additional five years could improve TCO and resale values, but argued that the economic life of a heavily utilised CV could be considerably shorter than its permitted regulatory life.
Future Outlook and Regulatory vs Economic Life
Whether these theoretical gains translate into actual savings, however, will depend on vehicle utilisation, maintenance costs, battery longevity, replacement costs, and how long fleet operators typically retain trucks.
The longer operating horizon also raises questions about charging infrastructure.
Bansal said Statiq is deploying 120-240 kilowatt (kW) chargers that are firmware-upgradable and designed to accommodate hardware retrofits as charging requirements evolve.
Tata Motors, one of the country’s largest CV manufacturers, said it is studying the government’s proposal and would not comment on its implications at this stage.
"The focus, therefore, should increasingly move from viewing a vehicle as an asset with a fixed age to looking at its usable and productive lifecycle.
"A longer operating window, supported by technology and appropriate maintenance, can improve asset utilisation, strengthen fleet economics, and create greater value across the vehicle lifecycle," Babu added.
The proposal, therefore, brings into focus the difference between the regulatory and economic life of a clean-fuel truck.
While an additional five years could improve the arithmetic of ownership, the absence of long-term operating experience with electric trucks and the potential cost of battery replacements make it difficult to establish today how much of the proposed 17-20-year life would actually be commercially viable.
The All India Transport Welfare Association (AITWA) welcomed the move and said this will help the resale of clean-fuel vehicles, and also conversion to CNG.
"With the quality of vehicles improving, the age limit should be at least 25 years. This is the first time the government is increasing the national permit time period.
"However, fleet owners are not using their long-distance vehicles for more than nine years even now," said Pradeep Singal, chairman of AITWA.
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Taking a new road
- The proposed amendment is specific to vehicles covered by Rule 88 of the Central Motor Vehicles Rules
- If finalised, the 12-year age limit for goods carriages other than multi-axle vehicles would increase to 17 years for eligible clean-fuel vehicles
- The 15-year limit for multi-axle goods carriages would increase to 20 years
Feature Presentation: Rajesh Alva/Rediff
