U.S. Electric Bus Market Size & Share Analysis - Trends, Drivers, Competitive Landscape, and Forecasts (2024-2030)

The U.S. electric bus market was valued at 1,268.3 million in 2023, which is expected to grow at a CAGR of 14.5% during the forecast period 2024–2030. The market is seeing growth due to several factors such as the availability of local, state, and federal funding for zero-emission buses, durable economic benefits to transit agencies, decreased battery costs, improved operational efficiencies, environmental benefits, and strict regulatory measures for reducing emissions.

Environmental benefit is a key driver for the adoption of electric buses in cities, particularly in areas where air quality is an issue, but also in places with ambitious greenhouse gas (GHG) reduction targets. In addition, growing concerns of local governments and environmental agencies over air quality degradation due to increasing urban vehicular emissions have led to the formulation of stringent environmental policies.

Currently, conventional diesel-powered buses are an integral part of the public transportation system and contribute significantly to GHG emissions. Consequently, the implementation of robust policies along with environmental awareness is being given preference to boost the operation of low and zero-emission transport systems in the U.S. Although the CNG-based public transportation system is still the most dominant alternative to fossil fuel-based public transport systems, electric buses are gaining traction due to their zero- or low-carbon emissions.

The transportation of people and goods accounts for about 29% of the GHG emissions in the country. The burning of diesel accounts for about 24% of the transportation sector’s emissions, which makes it essential to significantly reduce the emissions from buses. To support emission reduction, the government is taking concrete measures, such as the implementation of strong regulatory standards, on transit and school buses.

Several federal, regional, and state government grants and incentive programs already exist that can be used to supplement other funding sources and offset some of the upfront costs of making the switch to electric buses. In addition to federal grant programs, many states and regional authorities offer programs designed to fund transportation reform and encourage transitions to alternative fuel sources.

For instance, California has become a hub of new electric bus programs. The California Air Resources Board (CARB), a subsidiary of the California EPA, aids the implementation of state-wide clean air standards by funding innovative emissions reduction projects. A particularly good example is CARBS’ Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project (HVIP).

Moreover, Under EPA's Clean School Bus Program, rebates of up to $375,000 and $285,000 were offered to Greenpower all-electric type D and type A school buses, respectively, in May 2022.

Heading U.S. Electric Bus Market Trends & Drivers

Government Initiatives Act as Catalysts for Market

• Programs and projects such as the National Fuel Cell Bus Program (NFCBP) and the American Fuel Cell Bus (AFCB) Project have resulted in an increasing adoption of electric .
• This is also paving the way for technology transfer, policy groundwork, and growth of related components manufacturers in the market for electric buses in the U.S.
• Moreover, various states in the country have started shaping their product development policies that conform to air quality and climate change mitigation standards, with California leading the charge. Funding programs to encourage the adoption of these vehicles are also rising in number in the country.
• For instance, in FY2021, the Low or No Emission Grant program awarded grants to over 50 states and local governments, totaling $182.9 million, for the purchase or lease of zero-emission and low-emission transit buses, as well as for the construction, acquisition, and leasing of the required supporting facilities.

Market Growth Fueled by Environmental Benefits, Falling Battery Costs, and Improved Operational Efficiencies

• The growing concerns of local governments and environmental agencies over air quality degradation due to the increasing urban vehicular emissions have led to the formulation of stringent environmental policies in the U.S. Currently, conventional, diesel-powered buses are an integral part of the public transportation system, but they contribute significantly to greenhouse gas (GHG) emissions.
• Thus, the implementation of stringent policies, coupled with the rising environmental awareness among people, is encouraging the deployment of low- and zero-emission transport systems in the country. This is further boosting the growth of the market.
• Further, it is projected that because of growing operational efficiencies, the cost of all-electric vehicles along with buses will be less. Thus, the falling costs of batteries, along with the improved operational efficiency of electric buses, led to their increased sales.

High Capital Costs in Buses and Infrastructure Development

• Although the operating cost of electric buses is lower than that of conventional diesel and CNG buses, the upfront cost of electric buses is two to three times higher than the capital cost of diesel buses.
• The procurement cost of electric buses ranges between $500,000 and $950,000, depending on the vehicle type, battery size, and charging infrastructure, among others. The high cost of these buses is spotted as a major restraint for the growth of the market.
• Also, the market is in its nascent phase and the production is considerably low due to the underdeveloped electric bus ecosystem.
• Bus manufacturers in the U.S. primarily manufacture these buses on a built-to-order basis, which increases the upfront cost of these buses.
• In many states, local governments do not have sufficient funds to procure electric buses for public transportation, even with financial support from the central government.
• The high upfront cost of electric buses has to be lowered and brought on par with that of diesel buses for the market to grow. Until then, the high cost of these buses will continue hindering their large-scale adoption and market growth in the country.

Segmentation Analysis

Vehicle Type Analysis

• Battery electric bus (BEB) is the largest category, with a share of 70% in 2023, and the category is also expected to witness the fastest growth in the coming years.
• This dominancy and growth are because BEBs are widely used in the country, as they have become advanced, specifically with respect to batteries, along with the support of both government and private programs.
• Further, there is a huge problem with air quality in most urban areas of the country, which is compelling government and private organizations to purchase BEBs.

Further, vehicle types are classified into:

• Battery Electric Bus (BEB) (Largest and Fastest-Growing Category)
• Plug-in Hybrid Electric Bus (PHEB)
• Hybrid Electric Bus (HEB)

Length Analysis

• More-than-40-foot buses dominated the market in the U.S. and the category holds a revenue share of 85% in 2023, and it is also expected to remain the larger category during the forecast period, in terms of both volume and value.
• The difference in mileage between diesel-hybrid and diesel buses favors the hybrid technology for longer buses. A 60-foot diesel bus has less fuel mileage when compared to an articulated diesel hybrid bus of the same size.
• In addition, longer electric buses make more sense for environmental protection than comparatively smaller buses.

During the study, two lengths have been found:

• >40 Feet (Larger and Faster-Growing Category)
• <40 Feet

Battery Analysis

• Lithium-ion (Li-ion) batteries-based electric buses dominate the market, with a share of 85% in 2023 in terms of value.
• Falling prices of Li-ion batteries, coupled with their inherent advantages such as lightweight, smaller size, high energy density, low maintenance, and low self-discharge over NiMH are expected to boost their demand during the forecast period.
• In addition, Li-ion batteries are safer than other batteries in the market and are therefore more preferred for large-sized electric buses.
• Li-ion batteries are suitable for high-power applications due to the high nickel contents which offer high energy density and at the same time reduce dependency on cobalt. These two have become an important aspect due to which the industry is putting efforts to commercialize lithium-based electric buses.

Further, battery types are as follows:

• Lithium-ion (Li-ion) (Largest and Fastest-Growing Category)
• Nickel-Metal Hydride (NiMH)
• Others

Charging Type Analysis

• Plug-in charging station is the largest category, with a share of 65% in 2023, in terms of volume. This is due to its early adoption in the country for personal transport vehicles.
• Their flexibility and convenience make them an ideal choice that directs the emerging needs of the market across the country.
• Plug-in charging stations are also inexpensive as compared to traditional charging technologies, which contributes to their popularity.
• Many manufacturers of charging systems are collaborating with bus makers and public transit authorities to increase the adoption of their systems in the country.
• Whereas, inductive charging technology is expected to be the fastest-growing category, with a CAGR of 15% from 2024 to 2030 in the market, in terms of value.
• This is majorly attributed to its ability to quickly charge electric buses and reduce the anxiety of operators.
• Many manufacturers of charging systems are collaborating with bus makers and public transit authorities to increase the adoption of this technology in the country.

Further, the charging types are listed below:

• Plug-In (Largest Category)
• Pantograph
• Inductive (Fastest-Growing Category)

U.S. Electric Bus Market Companies’ News

• Daimler received an order in January 2023 to supply 45 buses to VLP Transport for intercity transport.
• The ownership of the West Virginia manufacturing facility was taken by Greenpower for whole electric school transportation in June 2022.
• In April 2022, the ZX5 electric bus with 738 kilowatt hours of energy was introduced by Proterra.
• BYD launched a Type A battery electric vehicle in January 2022, which is a zero-emission school bus that has safety features, performance, and design to fulfill the requirements of administrators and students.

Competitive Analysis

The U.S. electric bus market is at its growing phase, with BYD Motors Inc., Proterra Inc., and NFI Group Inc. as major BEB manufacturers and GILLIG LLC and NFI Group Inc. as major HEB market players. The competition is increasing due to several factors such as government partnerships, charging infrastructure, range, and cost, which play a crucial role in shaping the competitive landscape of the market.

U.S. Electric Bus Industry News

• Daimler received an order in January 2023 to supply 45 buses to VLP Transport for intercity transport.
• The ownership of the West Virginia manufacturing facility was taken by Greenpower for whole electric school transportation in June 2022.
• In April 2022, the ZX5 electric bus with 738 kilowatt hours of energy was introduced by Proterra.
• BYD launched a Type A battery electric vehicle in January 2022, which is a zero-emission school bus that has safety features, performance, and design to fulfill the requirements of administrators and students.