ELECTRIC BUSES: MONEY DRIVES

Date published: 2021-01-18   — by Brian Trappe

 

With some European nations setting ambitious goals to switch all their buses to electric vehicles by 2030, it is no surprise that there are 2,250 vehicles in Europe while the United States only has 300. By no means, however, can it compare to the staggering amount of 421,000 buses in China. According to Bloomberg, at end of 2018, 99.7% of the world’s electric buses (e-buses) were in China, which begs the question: why hasn’t the rest of the world adopted electric buses at such a scale too?

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To investigate this issue, one must first understand the two major factors that impede utilizing electric buses for mass transportation: limited ranges due to environmental or technological circumstances and steep pricing. In varying hot or cold environments, electric vehicles experience decreased ranges as their batteries have to use more reactants to produce the same current in these extreme conditions. A paper by the American Automotive Association asserted that this decreased efficiency can lower the range up to 40% for cold and 17% for hot weather. Moreover, electric buses can cost up to twice or four times that of a conventional diesel or combustion engine bus. In addition to this high upfront investment, these vehicles also require an extensive network of charging stations to offset their short ranges. While reduced emissions, fuel costs, and cost of ownership in the long-term offsets these disadvantages, these two factors remain a large obstacle for change.

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In the United States, a lack of straightforward government policies clashes with pricing. As Nick Albanese, a New York-based analyst at BNEF says, “there’s no industrial policy in the U.S. for e-buses.” According to Bloomberg, this lack of drive has compounded with the funding mechanisms of public transportation, which tends to lean towards costs efficiency rather than environmental concerns. Hanjiro Ambrose, a Ph.D. candidate at U.C. Davis, comments on this situation, saying “The cheapest technology available isn’t usually the newest technology available.” Other factors include difficulties to integrate electric vehicles due to their ranges. The city of Albuquerque, for example, sent back its electric buses in 2018 and sued its supplier BYD as the buses could not reach 275 miles for a single charge. As mayor Tim Keller states, “There’s no option for electric. We’ll go with a version of clean diesel or gas, then we’ll look to phase in electric once the technology catches up.”

In Europe, a similar story occurs. Although many cities have set goals, established bureaucracies impede the purchasing of pricy infrastructure and cars. Most cities cannot afford the upfront costs alone and must rely on regional or national funding in order to establish the necessary infrastructure and purchase vehicles. Even if they do acquire funds, change is often negligible. For example, London’s plan to introduce 240 e-buses by the end of 2019 only converts 2.9% of its total number of buses to electric.

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China has managed to circumvent both factors with strong policies and subsidies. By greatly subsidizing vehicles at the state and city level, each city only has to pay less than half of the price of each bus! This effectively allows cities to purchase twice the amount of buses to compensate for their limited range. Additionally, policies push for the implementation of such vehicles and foster competition between cities to vie for the most successful implementation of these new transportation systems. These elements ensure that cities lay down the proper infrastructure for EV buses to support their fleet. In one case, China established a myriad of charging piles, up to 40,000 in the city of Shenzhen. The fast implementation, however, comes with a hefty price tag. As South China Morning Posts claims, the fleet of 16,000 in Shenzhen costs the government CN¥8 billion (US$1.15 billion) per year to run. Seen from an additional $81,000 in grants, subsidies and tax benefits per electric bus purchase, China is investing serious money to enlarge its electric bus transportation system. 

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As the Chinese electric bus market saturates, however, electric bus manufacturers have sought ways to exploit overseas markets. Conjoined with innovative technology, electric buses are still finding themselves driving into American and European cities. One of the more recent implementations, for example, by public transport company Indygo in Indianapolis, Indiana plans to place a total of thirty-one BYD K11 electric buses on the road by September. Currently, the city has thirteen electric buses from BYD delivered on May 31st, 2019. To overcome e-buses’ short ranges, the company has promised to introduce charging stations to supplement the vehicles. Right now, Indygo is collaborating with Philadelphia-based Momentum Dynamics to install this system. Boasting wireless charging technology, this project would have vehicles with ranges up to 500km. With a price tag of US$96.3 million funded by a US$75 million grant, though, this Indianapolis bus fleet may have just encapsulated the European and American methods to structure new transportation systems.

Axiom is a headhunting firm comprised of a network of people who are passionate about technology to provide the most valuable service to their clients.

This article does not constitute legal advice.

The opinions expressed in the column above represent the author’s own.

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