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Zero-Pollution Buses Emerge With Backing From Silicon Valley

by Chris Martin


An all-electric bus made by Kleiner Perkins-backed Proterra Inc. Source: Proterra via Bloomberg

Buses that neither belch pollution nor draw on coal power are starting to appear on city streets, with the support of Silicon Valley and a company backed by Warren Buffett.

Over the next six months, Seattle is rolling out two all-electric buses made by Kleiner Perkins-backed Proterra Inc. The city gets 95 percent of its electricity from renewables, mostly hydroelectric dams that don’t use fossil fuels. So charging the fleet won’t increase emissions.

The trials, replicated in Dallas, San Antonio and Worcester, Massachusetts, show that battery-powered buses can move people more quietly and cheaply than traditional diesel models. While cities for years have embedded hydrogen and natural-gas vehicles in their fleet, the electric bus fueled by renewables holds the promise of delivering transport for the masses without damaging the atmosphere.

“We’re pushing to get as green as we can,” said George Stites, supervisor of fleet services for King County Metro, which runs Seattle’s transit system.

“Battery buses are where hybrid buses were 10 years ago. We’ll only buy hybrids or all-electric buses going forward. There will be significant fuel cost savings. We expect it to be a lot cheaper over its life.”

Musk, Bus

While all-electric sports cars from Elon Musk’s Tesla Motors Inc. have grabbed headlines and the attention of the public, it’s buses that are in many ways better suited for the technology. The girth of the bus can more easily absorb heavy battery units, and running them on set routes means charging cycles can be planned in advance.

Lesser known companies such as BYD Co., backed by Buffett, along with Proterra and New Flyer Industries Inc. dominate the nascent electric bus industry. New Flyer has gained more than 20 percent over the past year in Toronto. BYD, based in Shenzhen, China, has slipped 28 percent in the past year in Hong Kong.

City transit managers have long been ahead of the curve on replacing diesel vehicles. More than 41 percent of bus fleets were using battery, fuel-cell and hybrid technologies at the start of this year compared with just 2.1 percent of autos, according to the American Public Transportation Association.

Leading Way

“We’re leading the way with electric buses the same way we have with other alternative fuels,” said Virginia Miller, a spokeswoman for the Washington-based industry group. Those figures include hybrids and natural gas buses as well as all-electric.

Still, the benefits of all-electric buses may be limited. Only 2.5 percent of U.S. commuters use buses, compared with 76 percent who use their cars.

Recent battery improvements have made the new buses cheaper than diesel, with both lower lifetime fuel and maintenance costs. By 2020, 59 percent of the world’s transit buses will be electric hybrids and 12 percent will be all electric, according to analysts Frost & Sullivan.

Chicago Transit Authority expects two electric buses it bought from New Flyer Industries will each save $300,000 in fuel costs and $660,000 in public health costs over their 12-year expected runs. That more than makes up for the $500,000 premium over the diesel buses that the electric ones replaced. They can run for 100 miles — a full day’s work — before needing to recharge overnight. CTA operates about 1,800 buses.

‘Most Sense’

“Electric drive trains make the most sense in heavier vehicles,” said Michael Linse, a partner at venture capital firm Kleiner Perkins that made early investments in Proterra. “Hybrids get a third of the market now and they’re just marginally better and very expensive at $650,000 to $700,000. It was almost all diesel 10 years ago.”

BYD, the Chinese automaker partly owned by Warren Buffett’s Berkshire Hathaway Inc., projected it will sell as many as 200 electric buses in the U.S. this year after securing an order from Long Beach, California. The company has sold more than 5,000 of the electric buses globally, including 50 in in the U.S. BYD plans to sell about 6,000 electric buses this year.

Charging Time

Their 60-foot-long bus can carry 120 passengers 190 miles on a single charge. Long Beach is adding wireless charging system at one stop, where each bus can get enough juice for to go another four miles during the seven minutes it takes customers to board.

Electric buses cost more initially than diesel. Savings come over time with lower fuel and maintenance costs, said Michael Austin, a vice president at BYD in New York. The high entry cost has stunted demand from transit agencies because capital spending decisions are made separately from operations.

“It can be hard for them to see the lower total cost of ownership,” Austin said in an interview. “If you look over the lifetime you get at least $500,000 in savings,” per bus.

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