There are 345,000 electric buses in use today across the world, but the US accounts for only 300 of them. Now, Chinese electric vehicle company BYD is launching a new JV in the country in an attempt to boost that number: in partnership with clean-energy financing company Generate Capital, BYD is starting a leasing program for electric buses. The two say they will initially put in $200 million to the project to get it off the ground.
The partnership says it has secured several clients already, including universities and corporations who use the buses to transport students and employees to, from and around large campuses; and smaller municipalities.
BYD calls itself the world’s biggest electric car maker and supplies about two-thirds of all the electric buses in use in the US currently. The company is traded publicly in Shenzhen but also picked up a huge cash infusion of $450 million from Samsung in 2016.
“BYD’s mission is to fundamentally change the world by reducing our dependency on carbon-based fuels through the development and advancement of battery and electric vehicle technology,” said BYD Motors’s President Stella Li in a statement. “This partnership will be critical in that effort by creating new financing alternatives to a broader range of clients.”
Electric and hybrid buses provide a greener and quieter public transportation option compared to older vehicles — and while some will always insist on having their own space and their own vehicle, there is a strong argument to be made for shuttles and buses to reduce traffic congestion, not to mention the pressure on your wallet, too.
BYD cites figures from the U.S. Department of Transportation, which state that every zero-emission bus eliminates approximately 1,690 tons of CO2 over a 12-year period, equivalent to taking 27 cars off the road, as well as 10 tons of nitrogen oxide, and 350 pounds of diesel particulate matter.
Yet city governments, typically strapped for money, will often be the last to offload their legacy buses if they are still able to take people from A to B, even if the running costs of the newer buses over a period of time work out to be much cheaper.
That’s in contrast with companies like Uber, which is backed by billions of dollars, some of which it has used to invest in experimental new services: the company has worked with BYD in London and Chicago to run electric vehicle tests, although now that Uber has moved out of the leasing game, it’s not clear how this will follow through in terms of rolling out such vehicles to its drivers.
In any case, a leasing program that reduces upfront costs, is an important way to ease municipalities into making the switch.
This is also important because some believe leasing could potentially going to become a cornerstone of how all cars are “owned” in the future. The thinking goes like this: the newer generation of autonomous and electrified vehicles will simply end up being too cost-prohibitive to own outright for the majority of consumers (and public and private organisations), and so in many cases they will go the way of airplanes, where the ownership costs are handled by one party, and paying for periods of usage will be handled by another.
As an example of how much savings an electric bus can provide over a legacy bus, Antelope Valley Transit Authority in Los Angeles County says that it’s saved $46 million over the lifetime of a new fleet so far, which in its case works out to $46,000 per bus per year in savings on diesel fuel (it’s aiming to be all-electric by the end of this year). That’s before considering the 50 percent reduction in harmful emissions and quieter experience.
Generate Capital itself has raised at least $200 million in equity to finance green and new energy projects — these also include new systems for battery storage — and it regularly also offers debt to help finance new initiatives.
“We founded Generate Capital to bring precisely this type of proven solution to the world,” said Scott Jacobs, Generate Capital’s CEO and co-founder, in a statement. “Electric buses produce almost no greenhouse gas emissions; they’re cheaper to operate than diesel buses; have lower maintenance costs; and they’re quieter and more pleasant for the rider. Traditional leasing companies typically don’t value any residual in electric vehicles, which makes financing difficult. Programs like these are an all-around win for project developers, customers, and for the environment.”