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Valued at $445.7 million in 2018, the U.S. electric bus market is projected to reach $1,554.5 million by 2024, advancing at a CAGR of 23.9% during the forecast period (2019–2024).
Fundamentals Governing U.S. Electric Bus Market
Increasing preference for depot charge buses over on-route charge buses is the key trend observed in the U.S. electric bus market. Battery electric buses, at present, are offered in two models: a short-range electric bus equipped with small-sized on-board batteries that require frequent on-board charging and an extended-range electric bus equipped with large-sized on-board batteries that require slow overnight charging (depot charging). During the initial phase of electric bus procurement, the majority of the buses procured were on-route charge buses. However, depot charge buses have gained traction in recent years, as their operational characteristics are similar to those of diesel buses. With advancements in battery technology, the travel range of depot charge buses is also improving, further facilitating longer-distance transportation.
The availability of federal, state, and local funding for battery electric buses is one of the major factors driving the U.S. electric bus market. Several state, regional, and federal incentive and grant programs are already in place that can be used to complement other sources of funding and balance some of the upfront costs of making the switch to electric buses. The Federal Transit Administration (FTA) provides several grants for the purchase of electric buses. For instance, in 2018, the Low or No Emission Grant program awarded grants of nearly $85 million to over 50 state and local governments. Other federal grant programs include the School Bus Rebate program, the Urbanized Area Formula Funding program, and the Better Utilizing Investments to Leverage Development (BUILD) Transportation Discretionary Grant program. These grants are expected to benefit the electric bus market in the country during the forecast period.
Deployment of electric buses in school bus fleets can be viewed as a growth opportunity for the players operating in the U.S. electric bus market. According to the U.S. Public Interest Research Group (PIRG), in 2018, about 95% of the school buses in the country used diesel as a fuel for propulsion. These buses transported around 26 million students to schools on a daily basis. The transition from diesel school buses to their electric counterparts offers a significant opportunity to decrease fuel costs and emissions. Moreover, electric-powered school buses have the potential to substantially penetrate the U.S. market in the coming 5–10 years. In view of this, several government agencies are taking initiatives to replace diesel school buses with electric variants in their regions. For instance, in March 2018, the U.S. Environmental Protection Agency (EPA) granted $8.7 million to replace 450 diesel buses with electric buses in 141 school bus fleets in 32 states.
Segmentation Analysis of U.S. Electric Bus Market
When segmented on the basis of vehicle type, the U.S. electric bus market is expected to witness the fastest growth in demand for battery electric buses during 2019–2024. Battery electric buses have evolved in recent years, especially in terms of battery technologies, with assistance from both private and government programs for procurement. Furthermore, several urban areas wherein conventional diesel transit buses operate experience severe air quality issues. Such factors are further driving the adoption of battery electric buses in the country.
In terms of length, more-than-40-foot-long electric buses held the larger share in the U.S. electric bus market in 2018. The fuel mileage difference between conventional diesel buses and diesel hybrid buses favors hybrid technology for larger articulated buses. For instance, a 60-foot articulated diesel hybrid bus has around 38.5% better fuel mileage when compared with a conventional diesel bus of the same length. Also, a 40-foot diesel hybrid bus has around 21.2% better fuel mileage than a comparable 40-foot diesel bus.
Under segmentation by battery, the U.S. electric bus market, during the forecast period, is expected to witness the fastest growth in demand for electric buses that employ lithium-ion batteries for traction. Falling lithium-ion battery prices and inherent advantages offered by these batteries, such as smaller size, lighter weight, higher energy density, lower self-discharge, and lower maintenance cost, over nickel–metal hydride batteries are expected to fuel their demand in the country in the near future.
Among all charging types, plug-in charging was the largest market category in 2018. This can be mainly attributed to its early adoption in the U.S. for vehicles used for personal transportation. More than 70% of the total revenue generated in the U.S. electric bus market in 2018 came from the plug-in charging category.
Competitive Landscape of U.S. Electric Bus Market
The U.S. electric bus market is in its growing phase, with BYD Motors Inc., Proterra Inc., and NFI Group Inc. as major battery electric bus manufacturers and GILLIG LLC and NFI Group Inc. as major hybrid electric bus manufacturers. Other prominent electric bus manufacturers include Blue Bird Corporation, GreenPower Motor Company Inc., COBUS Industries GmbH, ElDorado National California Inc., and Nova Bus Corporation.
Recent Strategic Developments of Major U.S. Electric Bus Market Players
Players in the U.S. electric bus market are actively taking contracts and orders for the delivery of electric buses in different states of the country. For instance, in June 2019, Proterra Inc. announced that the company was selected by the Virginia Department of General Services for the supply of battery electric buses and charging stations for its state-wide contract. The transit agencies, institutions, and universities can now purchase the company’s zero-emission buses and related charging systems through the pre-established contract of the state. Furthermore, transit agencies in other states can leverage the Virginia state contract to simplify the electric bus purchase process.
In addition, companies are focusing on product launches to expand their portfolio. For instance, in May 2019, GILLIG LLC and Cummins Inc., together introduced the GILLIG battery electric bus in the U.S. The electric bus incorporates Cummins Inc.’s electrified powertrain. The vehicle includes standard 444 kWh batteries (six battery packs) and supports charging interoperability. The model’s variants will comprise a 35-foot version and opportunity charging.
Key Questions Addressed in the Report