U.S. Electric Bus Market Overview
Growing support of the federal and local governments for electric buses in addition to the implementation of stringent emission norms in the country is expected to drive the U.S. electric bus market in the coming years. Several incentives, such as tax rebates, grants, and subsidies, have been introduced by the governments in recent years to encourage the adoption of electric buses in the country. In addition, falling battery costs and improving charging infrastructure are expected to benefit the market during the forecast period.
Based on technology, the U.S. electric bus market is categorized into battery electric bus (BEB), plug-in hybrid electric bus (PHEB), and hybrid electric bus (HEB). Of all types, the fastest growth in the market during the forecast period is expected from BEBs. Higher subsidies for BEBs than other bus types can be viewed as a major factor driving the market growth of BEBs. In addition, falling battery prices are expected to bring down the upfront cost of BEBs, which will further support their adoption in the country in the coming years.
The U.S. electric bus market is mainly categorized into lithium–iron–phosphate (LFP) and lithium–nickel–manganese–cobalt oxide (NMC) battery-based electric buses. LFP-based electric buses have been leading the market, despite the lower energy density of these buses than NMC and other battery-based buses, as LFP batteries benefit from the fact that they have higher cycle life and safety levels.
However, during the forecast period, the U.S. electric bus market is expected to witness the fastest growth in the category of NMC-based buses. The main advantage of NMC batteries is their higher energy density, as compared to other battery chemistries, which is a major factor in the electric bus procurement. It is also expected that the safety of NMC batteries will improve in the coming years, which would further benefit the market for this category.
U.S. Electric Bus Market Dynamics
The local and state governments’ initiatives toward lowering greenhouse gas emissions can be viewed as a promising factor boosting the growth of the U.S. electric bus market. For instance, in September 2017, the U.S. Department of Transportation’s (DOT) Federal Transit Administration (FTA) announced grants worth $55 million through the Low- or No-Emission Bus Program for the procurement/replacement of transit buses and the development of stations that use alternative-fuel technologies. The funds allocated under this program must be obligated in a grant by September 30, 2020.
Similarly, initiatives at the state level, such as the Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project (HVIP) in California, are also helping transit agencies to obtain finance for electric buses. In addition, the government is actively working toward replacing diesel buses that have exceeded their useful life with electric buses. Thus, such procurement and replacement initiatives are expected to positively affect the growth of the U.S. electric bus market during the forecast period.
The high cost of electric buses is the most dominant factor hindering the large-scale adoption of these buses. Electric buses are generally costlier than their conventional diesel and CNG counterparts. The average price of these buses is usually three to four times the cost of diesel buses. Majority of this cost can be attributed to the cost of the battery packs used in these buses. Also, the U.S. electric bus market is in its nascent phase and the production is considerably low due to the underdeveloped electric bus ecosystem, which results in the high cost of these buses.
The U.S. had around 70,000 buses in the public fleet in 2017. The mean age of these buses was 7.7 years. Old diesel-based buses release significant amounts of emissions, including particulate matter, carbon monoxide, nitrogen oxide, and hydrocarbons. Unlike diesel-based buses, electric buses are environment-friendly. These old conventional fuel-based buses are expected to be replaced by new electric ones during the forecast period. Thus, the large fleet of old conventional buses in the country provides ample growth opportunities to the U.S. electric bus market players.
U.S. Electric Bus Market Competitive Landscape
The U.S. electric bus market is still in its nascent phase, with a few players operating within. Proterra Inc. was the largest electric bus manufacturer in 2017. Since its foundation in 2004, the company had sold 380 electric buses till 2017. In addition, Chinese automobile manufacturer BYD Co. Ltd. is increasing its penetration in the U.S. market. Other key players in the market are GreenPower Motor Company Inc., Nova Bus Corporation, Motiv Power Systems Inc., Complete Coach Works, AB Volvo, Daimler AG, and New Flyer Industries.