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Low-Emissions Transit Demand Grows

The Bipartisan Infrastructure Law, as enacted in the Infrastructure Investment and Jobs Act of 2021, allocates an unprecedented federal investment of up to $108 billion for public transportation. This substantial amount represents the largest funding provision ever made for public transportation in the history of the United States.

On February 8th, 2024, the Federal Transit Administration (FTA) announced $1.5 billion available in FY2024 funding to assist states, tribes, and local municipalities in the purchase or modernization of buses, bus facilities, and transportation workforce development. This amount is an increase over the $1.2 billion available in FY 2023 and $1.1 billion available in FY 2022.

The Low or No Emission competitive program specifically offers financial support to state and local government entities for the acquisition or leasing of transit buses with low or zero emissions. It also provides funding for the development of supporting facilities necessary for the operation of these buses. These investments help further the many cities around the US with carbon neutrality and net zero goals. But while there’s plenty of funding to establish and grow these programs, it’s unclear if the struggling US electric bus market will be able to keep up with demand.

Current US Electric Bus Market

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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. There are only a few key manufacturers of electric buses in the US. Some of the major battery electric bus manufacturers in the country are Proterra Inc., BYD Motors Inc., and NFI Group Inc. The latter is also one of the main hybrid electric bus manufacturers in the market along with Gillig LLC. However, several of these players have experienced difficulty or left the market in recent years.

Proterra used to be the dominant electric bus manufacturer in the US, delivering more than 1,000 electric transit buses to cities and municipalities. The company had been well-established, launching in 2004 and growing quickly ever since. However, even as the company expanded and grew, they struggled financially, and ultimately filed for Chapter 11 bankruptcy in August 2023. Different arms of the company have been auctioned off (including an acquisition of the Proterra Powered business unit by Volvo), but it’s unclear what the future of the company holds.

To add to the challenges faced by the electric bus industry, Nova Bus, another prominent manufacturer in this field, made the decision in June to shift its focus from the United States to Canada. This move, albeit disappointing for the U.S. market, signifies Nova Bus’s strategic adjustment to leverage opportunities and concentrate its efforts in their home country. The departure of Nova Bus and Proterra’s bankruptcy filing highlight the difficulties faced by electric bus manufacturers in the US, shedding light on the obstacles and uncertainties within the industry.

Market Opportunity

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According to a May 2021 report from the Center of Transportation and Environment on the Zero-Emission Transition for the U.S. Transit Fleet, with additional funding for vehicle and equipment procurement, technical assistance, and robust research, the US has the opportunity to fully transition its transit fleet to zero-emission vehicles (ZEV) by 2035. This gap in the electric vehicle market leaves more room for smaller electric bus manufacturers to fill, and federal funding should help these manufacturers grow with a steady stream of demand.

While Proterra’s bankruptcy and Nova Bus’s departure from the U.S. market highlight the current challenges in the electric bus industry, these developments do not necessarily indicate a decline in the overall potential and demand for electric buses. The industry continues to witness advancements in technology, increased government support for sustainable transportation initiatives, and rising public awareness of environmental issues. These factors contribute to a promising outlook for the future of electric buses, both in the U.S.

Further funding

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

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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.

If you are environmentally conscious and looking to grow your portfolio, contact EGÉA SRI for more information today!