U.S. Electric Bus Market Overview
The U.S. electric bus market is estimated to reach $745.2 million in 2018 and is projected to reach $1,948.5 million by 2024, witnessing a CAGR of 18.5% during the forecast period. Growing support of the U.S. federal and local governments for electric buses in addition to the enactment of stringent emission norms is anticipated to drive the market in the country in the near future. The U.S. government has introduced several incentives, such as tax rebates, grants, and subsidies, in the recent years to encourage the adoption of electric buses in the country. Additionally, improving charging infrastructure and declining battery prices are also expected to benefit the industry during the forecast period.
Based on vehicle type, the U.S. electric bus market is classified into battery electric bus (BEB), plug-in hybrid electric bus (PHEB), and hybrid electric bus (HEB). Among these, the market for BEBs is anticipated to witness the fastest growth, with a CAGR of 40.3% in terms of volume during the forecast period. BEB has evolved over the time, especially in terms of batteries’ energy density and range. Also, falling battery prices are anticipated to bring down the upfront cost of BEBs, which will further support their adoption in the coming years.
On the basis of battery, the U.S. electric bus market is categorized into lithium-ion (Li-ion) and nickel–metal hydride (NiMH). Li-ion category is anticipated to continue leading the industry in the near future, in terms of both volume and 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 batteries are the factors to boost their demand during the forecast period. In addition, Li-ion batteries are safer as compared to other batteries in the market and are therefore more favored for large-sized electric buses.
U.S. Electric Bus Market Dynamics
Several federal, regional, and state grants and incentive programs are already present in the country, which can be used to supplement other funding sources and offset upfront costs of electric buses. The Federal Transit Administration (FTA) offers a number of grant programs, many of which have been used to purchase electric buses. For instance, in 2018, the Low- or No-Emission Grant Program awarded grants to state and local governments, totally $84.5 million.
In addition, the Congestion Mitigation and Air Quality Improvement Program, State of Good Repair Program, School Bus Rebate Program, Urbanized Area Formula Funding Program, and BUILD Discretionary Grant Program are helping to offset some of the upfront costs of these buses, making transit agencies and school authorities to switch to electric buses. These funding programs are expected to benefit the U.S. electric bus market during the forecast period.
Though the operating cost of electric buses is low as compared to conventional diesel and CNG buses, the upfront cost of electric buses is two to three times higher than the capital cost of diesel buses. Procurement cost of electric buses ranges between $500,000 and $950,000, depending on vehicle type, battery size, and charging infrastructure, among others. High cost of these buses is spotted as major restraint for the growth of the U.S. electric bus market. Also, the market is in its nascent phase and the production of electric buses 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 and local governments do not have sufficient funds to procure electric buses for public transportation, even with the 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 the growth of the U.S. electric bus market.
According to the U.S. Public Interest Research Groups (PIRG), 95% of school buses run on diesel in 2018 (compared to around 60% of public transit buses). Switching to electric school buses will offer the greatest opportunity to reduce emissions and fuel costs in the U.S. electric bus market. Electric school buses have the potential for significant market penetration in the next 5–10 years. The adoption of battery electric school buses is spreading across the country and pilot programs are now underway in states including California, Massachusetts, and Minnesota.
PIRG urged state governments allocated funds from the $14.7 billion Volkswagen Diesel gate settlement for buying electric buses, along with building electric vehicle charging infrastructure. In March 2018, the U.S. EPA awarded $8.7 million to replace 450 diesel buses across 141 school bus fleets in 32 states. Thus, the large fleet of old conventional school buses in the country provides ample growth opportunities to the U.S. electric bus market players.
U.S. Electric Bus Market Competitive Landscape
The market is still in its nascent phase, with the presence of few major players. In the recent years, the government has planned several funding schemes and policies to support the U.S. electric bus market. Some of the major players operating in the market are Proterra Inc., BYD Motors Inc., NFI Group Inc., GreenPower Motor Company Inc., Gillig LLC, Blue Bird Corporation, Nova Bus Corporation, and The Lion Electric Co.