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US bus companies are poised to reap the rewards of Joe Biden's $174 billion EV planif they can crack 3 key challenges

Published by Business Insider on Sun, 02 May 2021

<p><img src="https://static3.businessinsider.com/image/608c517f35c46f0018c0baf9-2400/AP21119059885388.jpg" border="0" alt="biden" data-mce-source="Melina Mara/The Washington Post via AP, Pool" data-mce-caption="President Joe Biden addresses a joint session of Congress, Wednesday, April 28, 2021, in the House Chamber at the U.S. Capitol in Washington, as Vice President Kamala Harris, left, and House Speaker Nancy Pelosi of Calif., look on."></p><p></p><bi-shortcode id="summary-shortcode" data-type="summary-shortcode" class="mceNonEditable" contenteditable="false">Summary List Placement</bi-shortcode><p>Few industries were hit harder by the COVID-19 pandemic than bus companies, but White House plans for the future of transportation could take the industry from bludgeoning to boom times.&nbsp;</p><p>That's because buses are a chief target of President Joe Biden's plan to combat the climate crisis by electrifying US transportation. <a href="https://www.businessinsider.com/what-bidens-2-trillion-infrastructure-plan-means-for-you-2021-4">Biden's proposed $2 trillion infrastructure plan</a> would set aside <a href="https://www.businessinsider.com/biden-proposal-174-billion-for-evs-new-funds-for-renewable-power-2021-3">$174 billion for electric vehicle incentives</a> designed to help the <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2021/04/22/fact-sheet-president-biden-sets-2030-greenhouse-gas-pollution-reduction-target-aimed-at-creating-good-paying-union-jobs-and-securing-u-s-leadership-on-clean-energy-technologies/">US halve its carbon emissions by 2030</a>.</p><p>In the effort to reduce the impact of transportation, which accounts for nearly <a href="https://www.epa.gov/ghgemissions/sources-greenhouse-gas-emissions#:~:text=Transportation%20(29%20percent%20of%202019,share%20of%20greenhouse%20gas%20emissions.">30% of US greenhouse gas emissions</a>, publicly-owned vehicles are a fertile starting ground. Biden's proposal includes funding to replace 50,000 public transit buses and 480,000 school busesthe vast majority of them powered by diesel &nbsp;with electric ones.&nbsp;</p><p>Even before Biden put forward his plan, market research firm <a href="https://www.globenewswire.com/news-release/2020/11/19/2130343/0/en/North-America-Electric-Bus-Market-Growth-Trends-and-Forecast-2020-2025.html">Mordor Intelligence predicted</a> that over the next four years, the US bus industry will grow about 27% due to electric bus incentives at the state and federal levelsdespite significant setbacks in ridership from the COVID-19 pandemic.&nbsp;</p><p>Now, Biden's bold plans could transform the American bus industry to the point where demand for e-buses in the US could soon outpace industry-dominated China, according to <a href="https://www.idtechex.com/en/research-report/electric-hybrid-and-fuel-cell-buses-2021-2040/754">data</a> from tech research firm IDTechEx.&nbsp;</p><h2>The US bus industry is set to boom despite COVID-19 setbacks</h2><p>Biden's proposal, which will surely morph as <a href="https://www.cnn.com/2021/03/30/politics/democratic-unity-infrastructure-package/index.html">Congress debates</a> it, allocates $25 billion to replace 20% of America's school buses. Replacing 50,000 diesel transit buses at about $1 million a piece, would cost another $5 billion. These figures, crucially, do not include funding for charging stations along bus routes, though Biden plans to add incentives that would offset the disparity between diesel and electric costs and create a national network of 500,000 EV chargers by 2030.</p><p>What is clear is that the bill's "Made in America" requirements would advantage US manufacturers, chief among them those that have already launched e-buses, including ByD, ElDorado National, Gillig, New Flyer, Proterra, and Van Hool, according to IDTechEx.</p><p><img src="https://static5.businessinsider.com/image/5ffdcf1f978a130019d89df4-2400/Electric bus..jpg" border="0" alt="Electric bus." data-mce-source="Monty Rakusen/Getty Images" data-mce-caption="Electric bus." data-link="https://www.gettyimages.com/detail/photo/bus-driver-charging-electric-bus-at-charging-royalty-free-image/713770145'adppopup=true"></p><p>School bus manufacturers would also significantly benefit from the incentives, IDTechEx found, with companies like Blue Bird, GreenPower, Lion Electric, Navistar, and Daimler subsidiary Thomas Built Buses in a position to launch brand new multi-million dollar fleets. Biden's incentives would support the entire bus manufacturing supply chain, from raw materials to parts, and increase the production of electric powertrain components such as motors, batteries, and inverters.</p><p>But, experts say, it won't be easy to transform the bus industry. And if the electric vehicles are rolled out too soon, without adequate infrastructure or thought to how they should be deployed, it could cripple the nascent market.</p><p>From battery range to charging stations and rigid bus schedules, industry experts identified three key issues the US government and industry players must solve before e-buses can be rolled out at scale, and those ready to make them can reap the rewards.&nbsp;</p><h2>Electric buses are about twice as expensive as diesel ones</h2><p>Switching over to electric buses comes with a hefty price tag for transit agencies and school districts.&nbsp;</p><p>Many motor coach companies would be forced to double their prices, as diesel buses average about 500,000, while electric ones cost upwards of $1 million a piece, American Bus Association President and CEO Peter Pantuso told Insider.</p><p>While Biden's investment is not targeted toward motor coaches, city and school buses face similar costs. The extra costs would come at a time when many bus companies are facing significant revenue loss due to COVID-19 restrictions and the work-from-home boom. Pantuso told Insider that members of the American Bus Association (an organization that represents 3,800 companies) have been operating at 25% the capacity of 2019 this year.</p><p>What's more, many bus companies could be forced to double their fleets in order to accommodate the time it takes to recharge a depleted bus battery, David Wyatt, a technology analyst at IDTechEx, told Insider.</p><p>"Bus schedules are designed to minimize any kind of waiting periods. They want to have them running at all times if possible," Wyatt said. "If it's stationary, they're not making any money. And for electric buses, they need to be able to build in charge time throughout the day."</p><p><img src="https://static5.businessinsider.com/image/608c526535c46f0018c0bafa-1928/IMG_8081.jpg" border="0" alt="City bus" data-mce-source="Thomas Pallini/Business Insider"></p><p>Biden's proposal includes funding to replace 50,000 public transit buses and 480,000 school busesthe vast majority of them powered by dieselwith electric ones.&nbsp; There, transit agencies have mostly been able to avoid fare hikes by using state incentives, but they are only just starting to methodically roll out the new vehicles, California Transit Association Executive Director Michael Pimentel told Insider.</p><h2>Electric buses can't go nearly as far</h2><p>Second: The average electric bus can travel about 120 miles before it needs to recharge, according to equipment company <a href="https://www.gregorypoole.com/electric-bus-guide/#:~:text=That%20said%2C%20it%20is%20possible,due%20to%20a%20drained%20battery.">Gregory Poole</a>. Diesel buses can top 510 miles, on average.</p><p>While that rules out long-distance bus trips for now, the shorter range could be just fine for buses that run shorter routes in cities, Mike Waters, one of the chairmen of the California Bus Association, told Insider.</p><p>Wyatt of IDTechEx agrees. "City transportation is a low-hanging fruit for electrification," he said. "By the very nature of their schedules, it eliminates range anxiety and makes it easy to plan out charging stations."</p><p>In California, e-buses run shorter routes, while buses with internal combustion engines are still the go-to for longer journeys, Pimentel said. The use of e-buses for short routes -- especially school bus schedules that primarily use the buses at the beginning and end of the school day -- is a double-edged sword, according to Wyatt. He pointed out that while the schedules would eliminate range anxiety and provide more time for charging the vehicle, it might not be the most effective use of an electric bus, as they lose battery power over time and not just through wear and tear.</p><p><img src="https://static3.businessinsider.com/image/5f3c596a42f43f001ddfda7b-2400/GettyImages-591360495.jpg" border="0" alt="School bus" data-mce-source="Tim Graham/Getty Images"></p><p>"It isn't necessarily the best utilization of big battery vehicles," Wyatt said. "The more you drive an electric vehicle, the more fuel you save. Not doing mileage in an electric vehicle isn't the most cost effective way to use them."</p><h2>The infrastructure and planning is nowhere near where it should be</h2><p>And third, the availability of EV charging stations has long been a concern for electric vehicles. To date, the US only has about 100,000 charging stations, most of them designed primarily for passenger cars. Wyatt told Insider the bus charging stations would likely have to be built along routes or at depots.</p><p>While Biden's plan is one of the first federal initiatives to focus on increased EV infrastructure, Pimental said the infrastructure and planning needs to come before the vehicles themselves.&nbsp;</p><p>"It all really comes down to the infrastructure," he said. "At this point, the federal government has not played a very strong role in providing the support for the charging or hydrogen fueling that's necessary for zero-emission buses."</p><p><img src="https://static1.businessinsider.com/image/608c537634af8d001859a577-2400/GettyImages-1313933034.jpg" border="0" alt="GettyImages 1313933034" data-mce-source="Getty"></p><p>For the future of transportation, public buses could be the best case study in electrification, according to Wyatt.</p><p>"The people who run transit agencies know exactly what their vehicles are doing every day," Wyatt said. "They have the greatest incentive to figure out how to make electric vehicles work and how to do it in the most efficient and profitable way."</p><p><a href="https://www.businessinsider.com/6-bus-companies-benefit-from-bidens-174-billion-ev-plan-2021-5#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="https://www.businessinsider.com/what-its-like-make-beer-with-picobrew-c-home-brew-2020-3">We tested a machine that brews beer at the push of a button</a></p>
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