EV buses expected to be half of city fleets in the 2020s and 80% by 2040

It is true that electric buses cost more up front than their diesel-powered counterparts. However, those costs are falling, and when considering the entire life cycle of the vehicle — purchase price, fuels, operational and maintenance expenses — electric buses prove to be cheaper than their diesel counterparts.

Moreover, according to BNEF, the projected decline in battery costs likely make electric buses cost-competitive with diesel at the point of purchase by 2026. By then, the number of electric buses on the road is expected to more than triple and make up nearly half of the worldwide city bus fleets.

There are solid reasons behind this trend. Electric buses are better for public health (reducing local air pollution from burning diesel), better for the climate (increasing efficiency and reducing reliance on fossil fuels), and make economic sense in terms of their full cost of moving passengers, when factoring in maintenance and fuel cost-savings. These various benefits are explained in a May 2018 report from U.S. PIRG and Environment America.

In terms of public health, there is no question that electric is better. Diesel exhaust is classified by the U.S. Environmental Protection Agency (EPA) as a likely carcinogen, and it is internationally recognized as a cancer-causing agent that is also responsible for respiratory and other illnesses. Chicago estimates that its electric buses will result in $55,000 in healthcare savings annually per bus, while a Columbia University analysis for New York City pegs it at $150,000 per bus.

Another obvious benefit of shifting from diesel to electric buses is the reduction of greenhouse gas emissions in the transportation sector. In the U.S. alone, converting transit buses to electric could save over 2 million tons of emissions each year, a clear win for the climate.

Electric buses also have lower operating and maintenance costs. As with other electric vehicles, there is no fuel cost. Chicago Transit Authority estimates it saves $25,000 annually in net fuel costs for each bus.

Furthermore, the U.S. PIRG report states that:

“According to studies of electric buses currently in operation, electric buses save at least $0.19 per mile in lower maintenance costs. Over the lifetime of the bus, an electric transit bus can avoid hundreds of thousands of dollars in operating costs over an equivalent diesel or natural gas bus, from lower fuel and maintenance costs.”

While the e-bus costs more upfront, the fuel and maintenance cost-savings make up the difference, usually within 10 years.

Improved models and better battery technology are moving toward solving reliability issues, too. The newer electric bus models apparently can travel up to 200 miles or more on a single charge. Proterra makes e-buses designed to go 200 to 350 miles, for example. Electric buses also have fewer parts than diesel buses, which would theoretically require less maintenance.

Given these considerations, many cities are now announcing transitions to electric bus fleets. New York City announced in April its plans to electrify its fleet by 2040. Los Angeles is committed to an entirely zero-emissions fleet by 2030. Seattle is purchasing 120 e-buses by 2020 and has committed to electrifying its entire fleet by 2040.

Electric buses are moving toward the mainstream, despite attacks from oil industry apologists.

In Los Angeles. Foothill Transit, which serves 22 cities from downtown LA to the east, first tested Proterra buses in 2010 and has been continuing to expand their use.  “The technology is very robust,” Doran Barnes, Foothill’s executive director, told the Seattle Times. “We’ve had very few problems.” Foothill Transit now operates 17 Proterra electric buses, and recently ordered 13 more, including a new set of all-electric double decker buses. Foothill Transit has pledged to serve its hilly region with an exclusively electric fleet by 2030.

BNEF: E-Buses to Surge Even Faster Than EVs as Conventional Vehicles Fade, May 21, 2018

The latest long-term forecast from Bloomberg New Energy Finance (BNEF) shows sales of electric vehicles (EVs), increasing from a record 1.1 million worldwide last year to 11 million in 2025, and then surging to 30 million in 2030 as they establish cost advantage over internal combustion engine (ICE) cars. China will lead this transition, with sales there accounting for almost 50% of the global EV market in 2025 and 39% in 2030.

The number of ICE vehicles sold per year (gasoline or diesel) is expected to start declining in the mid-2020s, as EVs bite hard into their market. In 2040, some 60 million EVs are projected to be sold, equivalent to 55% of the global light-duty vehicle market. ‘Shared mobility’ cars will be a small but growing element (see below).

The advance of e-buses will be even more rapid than for electric cars, according to BNEF’s analysis. It shows electric buses in almost all charging configurations having a lower total cost of ownership than conventional municipal buses by 2019. There are already over 300,000 e-buses on the road in China, and electric models are on track to dominate the global market by the late 2020s.

Colin McKerracher, lead analyst on advanced transportation for BNEF, commented: “Developments over the last 12 months, such as manufacturers’ plans for model roll-outs and new regulations on urban pollution, have bolstered our bullish view of the prospects for EVs. The changes to our forecast this time compared to the previous one a year ago are modest, at least as far as cars are concerned. We now think EVs will be 55% of light-duty vehicle sales in 2040, rather than 54%, and represent 33% of the total car fleet worldwide.

“But the big new feature of this forecast is electric buses. China has led this market in spectacular style, accounting for 99% of the world total last year. The rest of the world will follow, and by 2040 we expect 80% of the global municipal bus fleet to be electric.”

BNEF expects the transition in transport to have major implications for electricity demand, and for the oil market. EVs and e-buses will use 2,000TWh in 2040, adding 6% to global electricity demand. Meanwhile, the switch from ICE to electric vehicles is forecast to displace 7.3 million barrels a day of transport fuel.

The BNEF team has taken a detailed look at whether the increased appetite for metals such as lithium and cobalt resulting from the rise of electrified transport could lead to supply shortages for these key metals.

Salim Morsy, senior transportation analyst, said: “While we’re optimistic on EV demand over the coming years, we see two important hurdles emerging. In the short term, we see a risk of cobalt shortages in the early 2020s that could slow down some of the rapid battery cost declines we have seen recently. Looking further out, charging infrastructure is still a challenge.”

The outlook for EV sales will be influenced by how quickly charging infrastructure spreads across key markets, and also by the growth of ‘shared mobility’.

Ali Izadi-Najafabadi, lead analyst for intelligent mobility at BNEF, said: “We predict that the global shared mobility fleet will swell from just under 5 million vehicles today to more than 20 million by 2040. By then over 90% of these cars will be electric, due to lower operating costs. Highly autonomous vehicles will account for 40% of the shared mobility fleet.”

The pace of electrification in transport will vary by country, particularly over the next 12 years as some markets jump ahead of others. BNEF forecasts that in 2030, EVs will make up 44% of European light-duty vehicle sales, 41% of those in China, 34% in the U.S., and 17% in Japan. However, a shortage of charging infrastructure and a lack of affordable models will hold back the market in India, so that EVs will make up just 7% of new car sales in 2030 there.

BNEF’s projections imply big opportunities for lithium-ion battery manufacturers. China is already dominant in this market, with a 59% global share of production capacity in 2018, and this is forecast to rise to 73% by 2021.

More information on BNEF’s 2018 Electric Vehicle Outlook can be found at https://about.bnef.com/electric-vehicle-outlook/ including a free public report with high-level findings.

Clients can find the full 2018 Electric Vehicle Outlook, related charts and datasets, and previous editions on the Terminal or on web.


Veronika Henze, Bloomberg New Energy Finance, +1-646-324-1596, vhenze@bloomberg.net