Electric Bus Market to Grow at 13.9% CAGR Through Policies & Incentives

Electric Bus Market to Grow at 13.9% CAGR Through Policies & Incentives

The worldwide shift towards sustainable mobility has compelled the governments to bring green policies to eliminate carbon emissions and incentivize electric vehicles (EVs) for faster adoption all across the world. 

A recent analysis by Frost & Sullivan finds that the growing adoption of electric transit buses, driven by pro-green government policies, has enabled global sourcing and supply chain for alternate powertrain buses. 

The total electric bus market including, hybrid electric vehicles (HEVs), plug-in hybrid electric vehicles (PHEVs), battery electric vehicles (BEVs), and fuel cell electric vehicles (FCEVs), is projected to exceed 211,000 units by 2030 at a compound annual growth rate (CAGR) of 13.9 percent. 

There are several growth drivers for the Adoption of Electric Buses reported by Frost & Sullivan:

Pro-Green Policies: Governments are promoting the use of alternative powertrain in buses plying low-emission zones, in addition to stringent emission norms, subsidies, and tax exemptions. The environmental impact of conventional fossil fuels will influence policy decisions in both developed and developing markets.

Rising Global Adoption enabling Economies of Scale: The introduction and adoption of electric transit buses in major global economies, such as Europe, North America, China, and Latin America, has helped advance global sourcing and supply chain and factory line production. It has facilitated the proliferation of duty-cycle-focused technologies which are benefiting from global adoption and enabling technology maturity and price declines. 

Improved Total Cost of Ownership: With the expected shrink in the difference between the purchase cost of EVs and diesel buses, the smaller price gap will be offset by savings on fuel and maintenance. The various tax breaks, subsidies, and incentives that are available will lower the total cost of ownership. 

Decreasing Electric Driveline Costs: With battery prices dropping nearly 80% in the 2010–2017 period, EVs have become the alternative powertrain for OEMs (e.g., Daimler, Volvo, VW) ahead of hybrids. 

According to the report, China, Europe, and Latin America are expected to constitute more than 89 percent of the market by 2030. Key regional insights and growth opportunities include:

  • North America: BEVs will gain considerable market share by 2030 due to a combination of lower battery prices, attractive leasing models, and zero-emission bus deployment mandates.
  • Latin America: The Zero Emission Bus Rapid-Deployment Accelerator (ZEBRA) project will increase the uptake of battery electric powertrains in the transit bus market as older diesel buses are replaced across various cities.
  • Europe: A clean vehicle directive and the Joint Initiative for hydrogen Vehicles across Europe (JIVE) projects will propel the adoption of electric and fuel cell buses in the European Union. 
  • China: BEV buses are expected to see moderate growth between 2022 and 2025 due to reduced subsidies and purchase incentives. Lower battery prices and fast-charging infrastructure will drive the growth toward 2030.
  • India: Battery electric buses will increase penetration in India due to Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) incentives, competitive original equipment manufacturer products, and the drop in acquisition prices while battery prices decrease.

However, despite EV favoring policies and incentives, there are several Growth Restraints for the Adoption of Electric Buses described as Market Viability, Economic Woes of Governments in Developed Markets, Pricing, and Technology Rollout. 

We have seen the downside of this, with almost 2000 EV’s that were to hit the roads in 2020-21 delayed to 2022-23 for now in India. States like Delhi, Punjab and many more have placed orders that have had to be modified repeatedly before finally moving ahead.

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Bhoomika Singh

Bhoomika is a science graduate, with a strong interest in seeing how technology can impact the environment. She loves covering the intersection of technology, environment, and the positive impact it can have on the world accordingly.