The massive US Infrastructure initiative that has been championed by the US Biden administration and which was signed into law last week after passing both houses of Congress, will not only see a huge amount of construction across the USA, but will also result a major boost to the electric and low emission bus industry in America.
The bill is likely make a big difference to the US school bus market but is likely to have a less dramatic impact on city transit buses.
The funding for transit buses (or city or urban buses) has been increased from a previous $US90.5 million per fiscal year to $US206 million per fiscal year, with each state getting $US4 million per year and the remainder to territories.
This funding is for “low or no emissions vehicles” so it will include hybrid vehicles as well as hydrogen and battery electric vehicles. However, many OEMs are not focusing on hybrid buses and there are few stakeholders that are pushing the market in that direction. Hydrogen buses will play a role but due to high cost, lack of infrastructure and available supply, may, at least in the short term, not take up the majority of that funding either.
Battery electric transit or route buses will lead overall with around 60 per cent, or $US126 million per year of that $US206 million per year going to battery electric .
However with school buses the scenario is very different.
During his campaign in 2020, President Biden launched a plan to convert all 500,000 US school buses to zero emission vehicles. The passing of this bill means he will fall short even if we allow him the possibility of a second term as President to accomplish it (which presumably was the intention, although this was never explicitly stated). However, few ever expected that particular target to be met.
A figure of $US2.5 billion has been allocated for “clean school buses and zero-emission school buses”. “Clean school buses” in the bill refer to “a school bus that the Administrator certifies reduces emissions and is operated entirely or in part using an alternative fuel” where alternative fuel can include natural gas, propane and biofuels as well as battery electric and hydrogen.
It is forecast that annual funding of about $US700 million will be spent per year on purchasing battery electric school buses, and about $US300 million will go to hydrogen, hybrids, propane, gas and biofuels combined.
However this will still see around 4700 BEV school buses being brought into the national school bus fleet per year for 2022-2026, still a small proportion of the overall fleet and it still means that the majority of the 40,000-50,000 new buses registered annually in the US will remain diesel for the foreseeable future.
Electric bus manufacturers such as Proterra and New Flyer will benefit from this news. The news highlights a particular opportunity for manufacturers focused on school buses such as Navistar, Blue Bird, Thomas Built and Lion Electric. Given the size of the opportunity, and the potential for short term supply constraints at some companies as the market reacts, Chinese bus companies such as BYD – which have bigger global economies of scale of bus production – may also be able to benefit.
US electric buses now look set to catch up to European levels in the coming years, albeit lagging far behind both what China has done already. Unlike the transit bus market, these subsidies look set to be the decisive factor in this market. For electric school bus manufacturers, these are exciting times: it likely brings forward 2026’s market opportunity to 2022.