Ashok Leyland, one of India’s leading commercial vehicle manufacturers, has announced plans to build a new plant in Uttar Pradesh focused on electric buses. Operations are expected to begin within 12-13 months, according to Chairman Dheeraj Hinduja.
Ashok Leyland’s upcoming plant in Uttar Pradesh will primarily manufacture electric buses, marking a significant shift towards sustainable transportation. “The UP plant will be predominantly focused on building electric buses and we are looking at a timeline of 12 to 13 months for the plant to be up and running,” Hinduja stated.
Focus on the UP market
The Uttar Pradesh government is keen to expand its electric vehicle (EV) bus fleet. This presents a strategic opportunity for Ashok Leyland to strengthen its presence in the region. Hinduja expressed confidence in meeting the state’s demands effectively, stating, “We feel quite confident that being there, we’ll be able to service them much better.”
Transition to electric vehicles
This new plant signifies Ashok Leyland’s first facility to prioritise EV production over internal combustion engine (ICE) vehicles. “This plant would be the company’s first to build more EVs than ICE products,” said Hinduja. This transition aligns with global trends towards greener transportation solutions and reflects the company’s commitment to sustainability.
Plant capacity and scalability
Initially, the Uttar Pradesh plant will have a capacity to produce 2,500 buses annually, with potential to scale up to 5,000 units based on market demand. Hinduja commented on the flexibility of the plant’s capacity, saying, “But depending on the market requirement I am sure it wouldn’t pose a problem.”
Financial performance and market response
Ashok Leyland’s shares recently reached an all-time high of Rs 222.85 apiece, buoyed by strong financial results for the January-March quarter of FY24. The company reported a net profit of Rs 933.69 crore, a 16.73 percent increase compared to the previous year. This performance was driven by robust demand in the light and medium commercial vehicle (L&MCV) segments.
Positive outlook and brokerages’ confidence
Brokerages have reiterated their positive stance on Ashok Leyland, highlighting attractive valuations and a promising demand outlook for commercial vehicles. The company’s guidance for FY25 remains strong, further bolstering investor confidence.
Why the focus on electric buses?
The decision to focus on electric buses at the new plant is influenced by multiple factors. Firstly, there is a growing global and domestic push towards reducing carbon emissions and adopting cleaner energy sources. The Indian government’s policies and incentives for electric vehicles also play a crucial role in this strategic shift. Moreover, the increasing urbanisation and need for sustainable public transportation solutions make electric buses an essential component of future urban mobility.
Ashok Leyland’s new plant in Uttar Pradesh represents a significant step towards the company’s commitment to sustainability and innovation in the automotive industry. By focusing on electric buses, the company not only aligns with global environmental trends but also meets the specific needs of the Uttar Pradesh market. The anticipated operational start within 12-13 months demonstrates Ashok Leyland’s proactive approach in leading the transition to electric mobility in India. As the company continues to perform strongly in the commercial vehicle sector, its strategic investments in EVs are likely to enhance its market position and drive future growth.