Daimler has announced that it is leading a $AUD212 million ($US 155-million) investment in Californian based electric bus makerProterra.

Daimler is working with San Francisco investment firm Tao Capital Partners which is the other lead investor  in the  electric bus maker.

Martin Daum, global head of Daimler Trucks and Buses, said at the IAA Commercial Vehicles show in Hanover, on Wednesday that the Proterra investment will allow both companies to grow their footprints in the U.S. and overseas,

“We aren’t just the leading supplier of conventional truck and buses; when it comes to electrification we also want to be the leader,” Daum said.

Proterra and Daimler said they had an agreement to also explore the electrification of select Daimler heavy-duty trucks.

Daimler is already set to test electric versions of its Cascadia heavy-duty truck at the ports of Los Angeles and Long Beach.

One of the first ventures of the Daimler-Proterra alliance will be to bring Proterra’s proven battery and drivetrain technologies to the North American school bus market via Daimler’s Thomas Built Bus division.

“We expect the cooperation with Proterra to deliver additional impetus for the development of heavy-duty commercial vehicles with electric drive,” Daum said.

Electric buses are expected to capture about 15 per cent of the U.S. market by 2025, according to Navigant Research.

“We have made several investments in disruptive transportation companies and believe electric vehicle technology is the future of mass transit fleets,” said Nick Pritzker, Tao Capital’s chairman.

California is the leading state for electric bus adoption . More than 36 of the 163 public transit agencies in the state are currently operating 132 battery-electric and fuel cell electric buses.

Transit agencies have an additional 655 electric buses  either on order, awarded or planned, the California Air Resources Board says and Los Angeles has said it will go fully electric by 2030.

The state has spent $25 million to incentivise school districts to replace conventional school buses with low- or zero-emission vehicles.

Proterra opened a factory in the City of Industry, just east of Los Angeles, last year. It said the plant would be capable of building 400 electric buses annually in its 100,000-square-foot space.