Tata Motors Faces Setback in India’s Electric Bus Market Amid Supply Crunch

Tata Motors, long a leader in India’s electric bus sector, has seen its growth stall this year due to a combination of global supply challenges and a cautious approach to government tenders. Between January and September 2025, the company sold just 213 electric buses, marking an 80% drop from the same period last year.

Industry insiders point to a shortage of rare earth magnets, a crucial component in electric drivetrains, as a major bottleneck affecting production. At the same time, Tata Motors has reportedly held back on bidding for several high-value government tenders, focusing on fulfilling existing orders and stabilising its operations amid rising input costs.

This slowdown has created opportunities for competitors such as JBM Auto, Switch Mobility, and Olectra Greentech, which have successfully secured fresh orders from state transport undertakings under India’s National Electric Bus Programme (NEBP) and FAME-II incentives.

The decline in e-bus deliveries coincides with Tata Motors’ recent corporate restructuring. Effective October 1, 2025, the company split into two entities: TML Commercial Vehicles Ltd (TMLCV), managing trucks and buses, and Tata Motors Passenger Vehicles Ltd, responsible for passenger cars, EVs, and the Jaguar Land Rover portfolio. Analysts suggest that the transition, while designed to improve operational focus and capital allocation, has temporarily slowed Tata’s electric bus rollouts.

“Tata Motors is taking a measured approach, ensuring supply chain stability and cost efficiency before aggressively participating in new e-bus tenders,” said an industry executive.

Despite these short-term challenges, experts remain bullish on Tata Motors’ long-term prospects. With urban transport electrification gathering pace across India, thousands of electric buses are expected to be tendered in the coming years. Once the rare earth supply situation improves and TMLCV’s new operational framework stabilises, Tata Motors is poised to regain momentum in the country’s rapidly expanding electric mobility market.

For now, the slowdown offers rivals a chance to consolidate their positions, but Tata Motors’ established brand, scale, and engineering expertise could enable a strong comeback in India’s e-bus segment.