The electric bus market is estimated to be valued at USD 36.98 Billion in 2024, growing at a CAGR of 16.5% over the forecast period (2024-2031). Growing government funding to expand the public transportation network along with the rising need to curb carbon emissions from public transport are fueling the market growth. Furthermore, technological advancements in batteries coupled with declining battery prices are also positively impacting the electric bus adoption.
Market Dynamics:
Rising investments in public transportation and growing concern towards lowering carbon footprint are the major drivers propelling the growth of the electric bus market. Various governments across the globe are actively investing in development of reliable and efficient public transport systems, which has increased the procurement of electric buses. For instance, China's major cities have committed to all-electric new bus procurements by 2020. Moreover, transition towards electric mobility helps reduce vehicular emissions significantly. As per the International Energy Agency (IEA), electric buses can help decrease CO2 emissions by 230 million tons per year until 2050.
The increasing public transport investments aimed at the modernization of bus fleets along with environmental benefits of electric buses, such as reduced emissions, are fueling their adoption. Various policy interventions by governments further encourage the electric bus deployment.
Market Drivers:
- Government support and subsidies for the adoption of electric buses: Government support through subsidies is a major driver for the growth of the electric bus market. Many governments across the world are offering substantial subsidies and incentives to promote the adoption of electric buses. For example, the government of China provides around US$ 10,000 subsidy for each electric bus procured by public transport agencies. Similarly, in Europe, countries like Germany and the U.K. provide 40-50% of purchase cost as subsidy. These subsidies make electric buses more affordable for transport agencies compared to diesel buses and encourage their large scale procurement. The subsidies also help in creation of required charging infrastructure. The government support is expected to continue in the coming years which will boost the electric bus sales.
- Growing concerns about environmental pollution from public transport: Rising awareness about environmental pollution and its adverse health impacts is another key factor driving the electric bus market. Public transport like buses are major contributors to air pollution in cities since thousands of buses run every day. The toxic emissions from diesel buses are a major concern. Electric buses address this issue as they are zero emission vehicles. Many cities across the world are now aggressively promoting electric buses to reduce air and noise pollution from public transport fleet. The push for clean air is compelling transport agencies to replace aging diesel fleets with modern electric buses. This growing environmental consciousness is propelling the electric bus demand.
Market Restraints:
- High acquisition cost of electric buses: The upfront purchase price of electric buses is significantly higher than conventional diesel buses currently, which acts as a major restraint. An electric bus costs around $300,000-500,000 compared to $150,000-250,000 for a basic diesel bus. The high battery cost is a major factor pushing up the prices of electric buses. This high initial investment deters many transport agencies from procuring electric buses in large numbers. The higher cost also limits electric buses primarily to developed nations that can afford the premium. This price barrier needs to be addressed for faster adoption of electric buses globally.
- Range limitations of electric buses: The driving range offered by current electric buses is still lower than diesel buses, posing a challenge. On a single charge, most electric buses can run only 150-300 km based on battery capacity, while diesel buses offer a range of over 500 km on a full tank. This relatively lower range necessitates more frequent charging and reduces operational flexibility for longer route operations. Battery swapping is one solution but charging infrastructure needs to be more widespread for its viability. The range limitation acts as a deterrent, especially for inter-city transport operators. Battery technology advancements are crucial to increase driving ranges of electric buses.
Market Opportunities:
- Favorable policies and regulations: Government policies promoting the adoption of electric vehicles through regulations provide a major market opportunity. Many nations and cities have announced plans to completely replace fossil fuel vehicles with electric vehicles including buses in the coming years. For example, China and India have set aggressive targets of having only electric buses on roads by 2030. Similarly, various cities in Europe and North America have pledged to procure only zero-emission buses post 2025. Such clear policy roadmaps and future bans on diesel vehicles compel transport agencies to shift to electric options, driving huge demand.
- Technological advancements in batteries: Rapid technological advancements in lithium-ion batteries is a key opportunity area. Continuous R&D is improving battery energy densities, reducing costs, and enhancing safety. New battery chemistries like solid-state batteries promise higher performance. This is gradually increasing driving ranges of electric vehicles. Falling battery prices will make electric buses cheaper to buy over the lifetime as maintenance costs are lower. Emergence of standardized, higher capacity battery packs will also simplify manufacturing of electric buses. The evolving battery technologies are expected to accelerate the electric bus adoption worldwide in the coming decades.
Link: https://www.coherentmarketinsights.com/market-insight/electric-bus-market-5091
Key Developments:
- In February 2023, AB Volvo secured a deal with a Belgium-based transport operator, Operateur de Transport de Wallonie (OTW) to provide 97 Volvo 7900 S-Charge buses. These buses, operational in over 25 countries, do not rely on the external charging infrastructure. They self-charge while in operation by recovering energy during braking and downhill driving.
- In April 2022, Proterra, a prominent U.S.-based e-vehicle manufacturer, introduced the ZX5 electric bus in April 2022. With a substantial energy capacity of 738KWH, this bus is set to be operational from 2023 and features advanced functionalities.
- In February 2022, VDL Groep BV and Pinnacle Mobility Solutions joined forces, investing $24,175 in the manufacturing of electric buses and e-mini trucks. The aim is to address the growing last-mile mobility segment in India.
- In January 2022, BYD announced the global delivery of 70,000 electric buses. The company emphasized its commitment to the 'Made in Europe for Europe' principle, revealing plans for continued investment and expansion at BYD's e-Bus factory in Hungary.
Key Market Players:
Key companies covered as a part of this study include AB Volvo, Alexander Dennis Limited, Anhui Ankai Automobile Co. Ltd., Ashok Leyland Limited, Blue Bird Corporation, Bolloré SE, BYD Company Limited, Daimler AG, Dongfeng Motor Company, Geely Automobiles Holdings Ltd., Hyundai Motor Company, Iveco S.p.A., New Flyer Industries Inc., Nissan Motor Corporation, Paccar Inc., Proterra Inc., Scania AB, Solaris Bus & Coach S.A., Tata Motors Limited, Toyota Motor Corporation, VDL Bus & Coach BV, Wrightbus Limited, Yutong Group, and Zhengzhou Yutong Bus Co., Ltd. are the major players.
