Much ado about nothing? Development of the full-electric bus market
Cities and municipalities increasingly focus on designing new strategies that are intended to cope with the on-going and upcoming transformations caused by global phenomena such as urbanisation and climate change. Full-electric buses would appear to be the natural choice for public transport operators and governments looking to influence such positive changes, but how has the market evolved in recent years? Marc Schabka and Christoph Länger at Siemens Mobility Urban Transport provide an overview of the global up-take of this environmentally-friendly transport option.
Following the Paris agreement in late-2015, which was recently also ratified by China and the U.S., it can be expected that governments will increasingly create necessary frameworks to meet the agreed targets. Additionally boosted by other initiatives such as the ‘smart city’ hype, the C40 network or various other ‘sustainable development’ strategies, we may see in the near future different kinds of alliances that will shape the urban transport sector.
The full-electric bus (e-bus) will be playing a significant role in this transition, since cities are progressively interested in putting into practice ecological alternatives that could, in the near future, transform the transport sector.
Nevertheless, the e-bus market has seen slow growth over recent years due, in particular, to high prices, infrastructural barriers, missing standards and low governmental commitments.
In our investigations we concentrated on mid-size buses and coaches (longer than 6m), with a capacity of more than 20 persons that operate in cities and urban areas, as they represent the largest part of the market for electric vehicles. E-buses are defined by electric drives and on-board batteries to store the energy they consume. The two main technologies used for charging are currently in use, and differ by the charging taking place on-board and off-board the bus. A key difference is also the mode of charging applied. An electric bus system may either be charged during operation (continuous or interrupted) or overnight (depot-charging). The appropriate solution depends on various conditions regarding the application of the bus systems.
The proposed market scenario deals with the development of the e-bus over the period 2016-2026, by dividing the market into five major regions.
In Europe many cities are focusing on emission reduction forced by EU legislation and other initiatives. Strong economic backgrounds and high levels of living are enforcing the investments into green technologies. E-buses are therefore expected to become a competitive technology against combustion or hybrid vehicles and a considerable increase is to be forecast from 2021 onwards. Hence, the share of new e-buses in the city landscape is expected to move towards 13% compared to normal city buses by the year 2026. Most likely Western European countries will start investing in alternative technologies earlier than its neighbouring countries. Eastern European countries are therefore likely to only have a 5% share of new city e-buses by 2026.
The average number of new orders showed a growth of 6% per year over the period 2012-2016 and is likely to keep constant over the next five to six years.
Asia – and especially China – represents the biggest market for e-buses during the whole analysed period. Boosted by local policies, it is estimated that the Asian markets account for 97% of the world e-bus market in 2016. Even if Japan and Korea promote environmentally-friendly buses, China is and will remain the largest market for e-buses worldwide. The technological development in China is highly influenced by a high performance battery industry promoting depot-charging solutions and various local subsidies. This combination creates the perfect conditions for a leading role in the e-bus industry.
It is foreseen that the Chinese e-bus market share might slightly decrease over time but will still account for more than 80% of the world market by 2026.
In Japan fuel-cell represents an upcoming technology but is still on a non-competitive price level for a mass market roll-out.
Middle East and Africa
African and Middle Eastern cities are not particularly focused on low emission transport systems, as the political support appears to be very low. Some countries in the Middle East, such as UAE, have begun to show interest in building up such an infrastructure. Nevertheless, the world market share will remain under 1% by 2026.
North America has the largest fleet of diesel-electric hybrid transit buses in operation. Cities are becoming more sensitive towards zero emission technologies and companies like Tesla and Proterra may accelerate market entries of plug-in charged e-bus vehicles. There has been a 30% growth of new orders per year over the period 2012-2015 but the number of e-buses still appears to be significantly small. The North American market is expected to have only a 5-10% share of e-buses in cities by 2026, due to low local and governmental commitments towards the e-bus in particular, and this trend will be highly influenced by the development of other clean technologies (especially the hybrid electric vehicles).
In North America the share of city buses in relation to overall buses in operation is lower than in Europe, therefore the potential for e-buses is expected to grow more slowly in comparison to Europe.
In Latin America alternative propulsions are not wide spread. Few cities are discussing the introduction of diesel-hybrid buses and e-buses are reduced to a rare number of initiatives. The capacity and route requirements demand BRT (bus rapid transit) solutions with higher transportation capabilities – and therefore solutions with higher range – with the result that e-bus technologies might not establish themselves in the market very quickly.
Recent order statistics show that the markets for fully-electric vehicles are developing more slowly than assumed in major research literature reviews during recent years. An approximate delay of growth of 1-1.5 years in markets can be expected. In Western Europe as well as in the USA the number of buses in 2016 corresponded on average to roughly the predicted values of 2015; Latin America and CIS (Russian Commonwealth) is over 90% behind the predictions and expectations.
Even in China the planned numbers have not proved to be manufactured, as in July 2016, BYD reported an order suspension of more than 2,200 vehicles for Shenzhen.
The share of the new emission-free city buses is likely to only slowly increase until 2020, while we estimate that a rapid increase will only take place in the period 2020-2026. Different trends influence the development of these markets worldwide, since they are determined by local political, economic and technical factors.
Much ado about nothing? Challenging economic developments make it hard to believe that costly new technologies like the e-bus will replace current combustion engine driven systems worldwide in the near future. It is rather unrealistic that the e-vehicles will disappear again from the markets as happened in the last century (e.g. in the 1980s and 1990s). Regulations and consumer pressure for cleaner and smarter technologies will increase the market pressure to introduce zero emission technologies. Strategies such as the ‘smart city’ hype do leverage a faster development, but cast doubts about its feasibility all over the world.
Additional accelerators of this development might be enhanced by driver assistant systems (transporting people with less, or entirely without, the interaction of a driver) and wireless intermediate charging systems.
The industry will react and develop affordable solutions and more likely for developed markets such as Europe, North America and China than for others.
To conclude, the bus industry is evolving rather slowly. Vehicle life spans are approximately 10-12 years and operators are currently deciding which vehicles will be used starting from 2026-2028. It can therefore be expected that new technologies like the e-bus will replace the existing engines incrementally to an extent of 10% of all new buses set into operation in 2026 worldwide.
- Schabka, Marc (2015): ‘Much Ado About Nothing? Smart City, Smart Mobility and the Full-Electric Bus’. Vienna University of Economics and Business
- SCI Bus Study (2013) – Buses Global Market Trends (Berlin, 2013) – Celine Wolter.
Marc Schabka is a Doctoral Candidate at the Vienna University of Economics and Business and is currently working at Siemens in the Mobility – Urban Transport Division in Vienna. His interest and research focuses on ‘smart’ mobility, e-mobility and solutions for the development of ecological and sustainable urban transport. Marc holds a Master of Science degree in Socio-Ecological Economics and Policy from the Vienna University of Economics and Business.
Christoph Länger works as Business Development and Product Portfolio Manager at Siemens in the Mobility – Urban Transport Division. Since 2003 Christoph has gained experience within various positions within the company, also in the field of e-mobility and industrial management. Christoph started his career as a management consultant responsible for supply chain and IT projects at KPMG consulting and holds a master degree in economics (University of Vienna).