Business and Financing Models
for Transitioning to Electric Buses
Jack Crawford
Graduate School of Economics at Kyoto University and Contractor at United Nations ESCAP

8th May 2024, M2G-ITS Lab Workshop 2024 at Kyoto University

Total Cost of Ownership: Electric vs Diesel• The biggest challenge for electric buses is their high upfront cost compared to ICE buses• Mainly influenced by battery costs, prices of which have fallen 24% since 2016 and 79% since 2010

Cost (USD $1000)• Electric buses to reach cost parity with ICE counterparts in 2030 without subsidies

Source: Bloomberg (2018)

Jack Crawford | M2G-ITS Lab Workshop 2024 @ Kyoto University, May 8, 2024 | Business and Financing Models for Transitioning to Electric Buses

Financing Landscape• Self-funding with various levels of subsidies most popular• Can lead to complex funding structures with different agencies

Phasing out of subsidies
due to market maturity
Municipal subsidies in Seoul:$75,000 subsidy available for427 buses in Seoul
National FAME II Scheme:
Government subsidies tosupport 7,000 electric buses
across the country

Source: Bloomberg (2018)

Jack Crawford | M2G-ITS Lab Workshop 2024 @ Kyoto University, May 8, 2024 | Business and Financing Models for Transitioning to Electric BusesExample from China: Role of Subsidies
Subsidies necessary for early stages of e-bus adoption. However, they aren’t sustainable, especially for developing countries•

China: phase-out of subsidies coincides with e-bus maturation, decreasing 20% from 2016-2018, and 40% from 2018-2020
Purchase Subsidies on Electric Buses in China, 2009 - 2019

USD $10,000 per vehicle$8500.000
400.000$6300.000$4200.000$2$-

Source: ESCAP (2024); IEA (2024)

Electric Bus Stock•100.0002009201020112012

Over 10 Meters201320148-10 Meters

2015

2016

6-8 Meters

2017

2018

2019

0EV Bus StockJack Crawford | M2G-ITS Lab Workshop 2024 @ Kyoto University, May 8, 2024 | Business and Financing Models for Transitioning to Electric BusesShifting Pressure to the Operator• Removal of subsidies shifts pressure to meet emissions targets onto transport providers, often self-financing• Germany began this process in February 2024, while Japan is still in an early adoption phase
Electric Bus Stock and Sales Share in Japan and Germany, 2016-2023
30002800

Electric Bus Stock

12%

2000

1700

1500

8%

1300

1000

010%

6%

760
14029 1102920162017EV Bus Stock Japan

39160

20184%

38047575777170

2019202020212022

2023

EV Bus Stock Germany

EV Sales Share Japan

Sales Share (%)

14%

2500

50016%2%0%

EV Sales Share Germany

Source: IEA (2024)

Jack Crawford | M2G-ITS Lab Workshop 2024 @ Kyoto University, May 8, 2024 | Business and Financing Models for Transitioning to Electric BusesThe Operator’s Perspective: No One- Size Fits All Approach
Business Models for Electric Buses in Different Parts of the World

Source: ESCAP (2023)

GCC: Gross Cost Contract, OPM: Outright Purchase Model

Jack Crawford | M2G-ITS Lab Workshop 2024 @ Kyoto University, May 8, 2024 | Business and Financing Models for Transitioning to Electric BusesTypes of Business Models for Electric Buses in Public Transport

Purchase (public transport authority)
Operation and Maintenance (operator)

Source: ESCAP (2023)

CI = Charging Infrastructure, EUP: Energy Utility Provider, AMC: Annual Maintenance Contract, O&M: Operation and MaintenanceJack Crawford | M2G-ITS Lab Workshop 2024 @ Kyoto University, May 8, 2024 | Business and Financing Models for Transitioning to Electric BusesTypes of Business Models for Electric Buses in Public Transport

ModelGross CostContract

Ownership and Financial RiskPublic transport authority purchases the buses andretains fare revenue. Operator is responsible for
operating buses against pre-determined per km
payments.

Advantage

Disadvantage

Financial stability
as operators
receive a fixed fee
per kmFixed payments might limit theability to adapt services basedon operational realities. I.e., it
might not be financially feasible
for operators to increase
frequencies during peak times
without adjustments to thecontract terms

Purchase (public transport authority)
Operation and Maintenance (operator)

Source: ESCAP (2023)

CI = Charging Infrastructure, EUP: Energy Utility Provider, AMC: Annual Maintenance Contract, O&M: Operation and MaintenanceJack Crawford | M2G-ITS Lab Workshop 2024 @ Kyoto University, May 8, 2024 | Business and Financing Models for Transitioning to Electric BusesTypes of Business Models for Electric Buses in Public Transport

ModelOwnership and Financial Risk

Battery Lease

Operator owns the bus but leases the battery from a
specialized provider, reducing the upfront purchase priceof the bus and removing the operator from risks
associated with battery life and technology upgrades.

Advantage

DisadvantageLowers initial costsDependent onand aligns
battery provider for
expenses withcritical operational
components
batterylife cycles
Purchase (public transport authority)
Operation and Maintenance (operator)

Source: ESCAP (2023)

CI = Charging Infrastructure, EUP: Energy Utility Provider, AMC: Annual Maintenance Contract, O&M: Operation and MaintenanceJack Crawford | M2G-ITS Lab Workshop 2024 @ Kyoto University, May 8, 2024 | Business and Financing Models for Transitioning to Electric BusesTypes of Business Models for Electric Buses in Public Transport

Purchase (public transport authority)
Operation and Maintenance (operator)

Source: ESCAP (2023); World Bank (2021)

CI = Charging Infrastructure, EUP: Energy Utility Provider, AMC: Annual Maintenance Contract, O&M: Operation and MaintenanceJack Crawford | M2G-ITS Lab Workshop 2024 @ Kyoto University, May 8, 2024 | Business and Financing Models for Transitioning to Electric BusesEvaluating Alternative Business Models

Source: ESCAP (2023)

Jack Crawford | M2G-ITS Lab Workshop 2024 @ Kyoto University, May 8, 2024 | Business and Financing Models for Transitioning to Electric Buses

Thank you!

Monograph

Transport Research andEducation NetworkReference List
Bloomberg, Electric Buses in Cities Driving Towards Cleaner Air and Lower CO2, (2018)
International Energy Agency, Global EV Data Explorer, (2024), available at: https://www.iea.org/data-andstatistics/data-tools/global-ev-data-explorer
United Nations ESCAP, Accelerating Electric Mobility in Public Transport: How Asia and the Pacific Could Unlock
Financing for Electric Buses, (2024)
United Nations ESCAP, Electric Mobility in Public Transport: a Guidebook for Asia-Pacific Countries, (2023)
World Bank, Electrification of Public Transport: A Case Study of Shenzhen Bus Group. License: Creative Commons
Attribution CC BY 3.0 IGO, Washington, DC. (2021)