ELECTRIC BUS MARKET ANALYSIS

Electric Bus Market Size and Trends

The electric bus market is estimated to be valued at USD 36.98 Billion in 2024 and is expected to reach USD 107.92 Billion by 2031, growing at a compound annual growth rate (CAGR) of 16.5% from 2024 to 2031.

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The electric bus market is driven by the need to reduce emissions from public transport. Major cities around the world are focusing on replacing their existing bus fleets with electric buses to improve the urban air quality. Countries are offering subsidies and promoting the adoption of electric buses. Bus manufacturers are launching new electric bus models with greater range to address consumer concerns. Also, lowering battery prices and advancing battery technologies are making electric buses more viable compared to diesel buses. Widespread charging infrastructure development by national governments will further accelerate this transition and drive the electric bus market in the coming years.

Climate change concerns and demand for sustainable public transit

As the impacts of climate change become increasingly visible and hard to ignore, governments, and public transit agencies around the world are under pressure to reduce carbon emissions from vehicular traffic. Buses form a crucial part of urban public transportation networks, and the conventional diesel buses that are most commonly used have significantly higher carbon footprint compared to electric buses. Many cities are major sources of air and noise pollution, and electric buses offer a cleaner, greener alternative to transition away from fossil fuel dependent mass transit. Public awareness about sustainability and corporate social responsibility is also on the rise. More companies and organization are committed to reducing their environmental impact, and promoting the use of electric vehicles as part of their efforts. Transit agencies have recognized that shifting to electric buses can help them gain goodwill from environmentally conscious citizens and demonstrate leadership in climate action. The zero-tailpipe emission of electric buses makes them especially appealing for public transportation in urban areas struggling with air quality issues. Concerns over worsening urban air pollution and public demands for a shift towards renewable energy are a major driver that is compelling more cities and public agencies to actively support electric bus adoption.

For instance, as of March 2022, China had over 421,000 electric buses in operation, constituting approximately 99% of the global electric bus fleet. Stringent government mandates, environmental considerations, and an expanding charging infrastructure are driving the electric bus market’s growth in Asia Pacific Region.

Governments around the world are also incentivizing this shift through various subsidy and tax break programs for electric buses and related infrastructure. For example, the growing bus fleet electrification programs in Chinese cities were mainly driven by strong policy push and financial support from the national and local governments. The California marketplace for electric buses has also expanded rapidly over the past few years backed by massive grants and funding from the state. As emissions regulations get tougher worldwide, electric buses are emerging as a cost-effective means for transit agencies to transition to cleaner fleets and meet compliance standards. Their lower operating costs compared to diesel buses over the lifespan also make electric buses an attractive proposition for agencies aiming to maximize available budgets. With more automakers developing electric bus models, the options available to agencies are increasing as well. As battery technologies advance further, range limitations which were a challenge earlier are becoming less of a concern. All these factors combined are significant drivers that are fuelling the rising global demand for electric buses from a public transportation perspective.

For instance, in January 2023, the India-based electric mobility company, GreenCell Mobility Ltd, signed a contract with the transport department of the government of NCT Delhi. The agreement involves the deployment of 570 electric buses over the next two years. This move is driven by increasing population, environmental concerns, and a shift in consumer preference toward public transport.