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As electric bus market expands in US, manufacturers struggle to keep up

Fueled by federal funding, the transition to low-emissions public transportation represents a big opportunity for the struggling U.S. electric bus manufacturing industry.

Green SEPTA transportation sign in Philadelphia

A green SEPTA logo at a bus stop. Source: Shutterstock/4kclips

Fueled by funding from the federal government, cities across the country are accelerating the transition to electric vehicles for public transit systems — although turmoil in the electric bus industry could hamper those rollouts. 

The Southeastern Pennsylvania Transportation Authority (SEPTA), for example, which runs in parts of Pennsylvania, New Jersey and Delaware and serves the Philadelphia metro area, received $80 million in June to begin the transition to net-zero public transportation. The money comes from the Department of Transportation’s Low or No Emissions Grant Program, funded by the Bipartisan Infrastructure Law (BIL) of 2021.

The program provides funding — a total of $1.3 billion — to applicants seeking to purchase low or no emissions buses or other supporting infrastructure.

SEPTA plans to use its grant money to make improvements at six bus maintenance facilities that are responsible for housing 67 percent of its fleet. It has not yet broken ground. 

This investment will further the city of Philadelphia’s goal to achieve carbon neutrality by 2050.

"SEPTA is committed to converting to a zero-emission bus fleet by 2040," said Leslie Richards, SEPTA general manager/CEO, at a press conference.

Not enough buses 

The agency will upgrade power systems, modernize electrical infrastructure and install safety systems that will eventually support either battery electric or hydrogen-powered fuel cell buses. Or potentially both.

"I think we’re going to have a mixed fleet," said Emily Yates Giulioni, director of innovation at SEPTA. One reason behind that strategy is marketplace realities: Right now there are not enough e-buses to supply the entire fleet. In recent years e-bus manufacturers have run into headwinds.

Proterra was the leading electric bus manufacturer in the U.S. before it filed for bankruptcy in August. Nova Bus, another electric bus manufacturer, decided to leave the U.S. marketplace to focus instead on Canada in June. 

"[There are] challenges with the market supply demand," said Giulioni, "with Proterra going bankrupt and Nova shifting out of the U.S. market, that really only leaves a couple of [original equipment manufacturers] that can build these buses — and everybody’s transitioning."

Market opportunity 

According to Giulioni, SEPTA believes these two factors will translate into huge demand in the EV bus marketplace. Coupled with the national shift from diesel buses to low and no emission engines, that market is set to explode. 

The May 2021 report "A Zero-Emission Transition for the U.S. Transit Fleet" from the Center of Transportation and Environment — produced at the request of Sens. Chuck Schumer (D-N.Y.) and Sherrod Brown (D-Ohio) — found that with additional government funding and regulatory incentives, the U.S. could fully transition its bus fleet to zero-emissions vehicles by 2035. 

In November 2021, BIL was passed and the Low or No Emissions grant was funded.

The over 100 recipients of the Low or No Emissions grant signify expedited growth in the EV transportation and infrastructure manufacturer marketplace. Low or No funding recipients range from major metros such as Philadelphia to small cities such as Jonesboro, Arkansas, which received $1.02 million to purchase hybrid buses, and medium-sized Iowa City, Iowa, which received $23.3 million for e-buses.

"SEPTA will invest between $105 and $140 million every year between 2026 and 2034 to transition to a zero-emission fleet," said Richards in 2022.

In February, SEPTA announced the purchase of 10 fuel cell buses from New Flyer, a zero-emission bus manufacturer. Giulioni advised potential bus manufacturers to keep an eye out for new RFPs as the zero-emission transition continues. 

Further funding

The demand for buses isn’t the only factor that has increased — so has the size of the required workforce. 

As new bus depots go into construction, a wave of new construction, engineering and managerial opportunities are arising. Seven months after receiving the grant money, SEPTA is preparing to expand its workforce.

"The workforce that goes into maintaining and developing these buses … is another thing that [SEPTA] has to start thinking through and building up," said Giulioni. 

Once the $80 million from the grant is disbursed, SEPTA and all other applicants — both past and prospective — are eligible to apply for the 2024 round. 

Along with the Federal Transit Administration’s (FTA) Buses and Bus Facilities program, the Low or No grants will be awarded to transit agencies annually, said an FTA spokesperson. The notice of funding opportunity for 2024 will be issued in coming months. 

GreenBiz will continue to monitor the U.S. transition to no-emissions public transportation. 

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