Liquefied natural gas (LNG) is among the cheapest fuel options for the transport and logistics sector, particularly for buses and heavy goods vehicles (HGVs), for the next decade and a half.
According to an independent series of studies by the Council on Energy, Environment and Water (CEEW), for medium goods vehicles (MGV) and HGV, EVs currently remain more expensive than diesel, compressed natural gas (CNG) or liquefied natural gas (LNG) in 2024.
“LNG is expected to remain the cheapest option for buses and trucks until 2040. Therefore, for HGVs, large-scale adoption of EVs and green fuels like green hydrogen will require targeted R&D, supporting infrastructure, and cost reductions,” the think tank said.
In contrast, electric vehicles (EVs) are already cost-competitive across key segments — especially two and three-wheelers, taxis, and private cars in states with supportive EV policies. E-two-wheelers already offer the lowest total cost of ownership (TCO), at ₹1.48 per km versus ₹2.46 for petrol models.
EVs also lead in the three-wheeler segment-three-wheeler EVs cost ₹1.28 per km versus ₹3.21 for petrol. Further, EVs deliver major savings for commercial taxis, where daily operating costs matter most.
Heavy vehicles
The HGVs category follows a similar pattern to light goods vehicles (LGVs), where EVs are the most impacted by distance travelled, while diesel is the least affected.
As distance increases, the cost gap narrows between EV and other fuels, but even with a 50 per cent higher distance than the base case, EVs still remain the most expensive option, whereas LNG remains the most affordable option across all scenarios, the CEEW study pointed out.
“LNG and CNG are the most sensitive to maintenance cost variations, while EVs are the least affected. For every 50 per cent variation in maintenance costs, the impact on TCO is 19 per cent for LNG, 17 per cent for CNG, 14 per cent for diesel, and 7 per cent for EV,” it explained.
As maintenance costs increase, the cost gap narrows between EVs and other fuels, yet LNG remains the most economically viable option in all cases.
In the case of buses, CEEW said that similar to four-wheelers, EVs experience the highest total cost of ownership (TCO) increase when distance decreases, while diesel is the least affected.
Conversely, the reduction in TCO due to higher distances is highest for EVs and lowest for diesel. Diesel, CNG, and LNG remain in a similar cost range if the distance is lowered, with CNG and LNG being the cheapest and EV the most expensive, it explained.
As distance increases, the cost gap between CNG, LNG, and diesel widens. The most affordable option is LNG, followed by CNG and diesel. EVs have the highest TCO in both the base case and 50 per cent lower distance scenario, and it only marginally pips diesel if the distance travelled increases by 50 per cent, the CEEW study revealed.
Suggestions
The think tank said that LNG-powered buses and trucks currently have the lowest TCO in their respective segments.
LNG can be priced lower than CNG, as it can be distributed and sold by LNG import terminals or third-party providers without passing through city gas distribution (CGD) companies that charge additional margins and cascading taxes, it added.
In states that have access to LNG terminals, LNG refuelling stations can be established along key highways that have regular movement of buses and trucks, the think tank suggested.