Electric transit buses draw startups, money

LOS ANGELES -- Tesla's Elon Musk transformed electric cars into objects of desire. Can Proterra do the same for the electric city bus?

Nope. It's not even trying.

"Not sexy, for sure," Josh Ensign, the electric bus startup's chief operating officer, said with a laugh.

But looks aren't everything. The market for battery-powered electric buses seems ready to rocket. Orders in the U.S. are gaining traction.

Last week, Proterra said it had raised $55 million in investment capital atop $290 million raised earlier. The new money comes from Al Gore's investment fund and BMW's venture capital arm. GM Ventures and Kleiner Perkins Caufield & Byers had already chipped in.

Proterra Chief Executive Ryan Popple said an initial public stock offering might happen this year or next.

The Silicon Valley company is increasing its presence in California, with a new factory in the City of Industry, southeast of Los Angeles, to supplement an existing plant in Greeneville, S.C.

"There's a level of interest in this field that there wasn't five years ago," said Popple, a former finance director at Tesla. (Ensign left Tesla last year as head of manufacturing.)

About 56,000 public transit system buses are operating in the U.S. Most burn diesel or gasoline fuel.

Urban transit districts are swapping those out for more environment-friendly diesel-electric hybrids and buses that run on compressed natural gas.

But only pure-electric buses emit no pollution from the tailpipe and contribute no greenhouse gases.

Battery costs have declined over the past few years. Electric bus-makers claim that they will cut the operating costs for public transit agencies, and agencies that have tested them agree.

"No doubt, electric buses are the future of bus transportation," said Jerome Lutin, a consultant who spent 20 years as an executive with NJ Transit in New Jersey.

California is set to emerge as a center for electric bus engineering, design and manufacturing. And Proterra isn't the only game in town.

A U.S. offshoot of Chinese battery and vehicle maker BYD (it stands for Build Your Dreams) manufactures electric buses in Lancaster, north of Los Angeles. The company and its 600 employees also make trucks, battery packs, LED lighting systems and battery storage systems, and the operation is expanding.

Complete Coach Works retrofits buses with electric powertrains, and Ebus makes fast charging stations for electric buses, both in the Los Angeles area.

Traditional bus-makers Gillig, based in Livermore, Calif., and New Flyer in Canada's Manitoba province, offer electric models.

Electrics represent a tiny fraction of total bus sales. Fewer than 1 percent of transit system buses across the U.S. are pure battery powered.

Price is a big reason. The numbers vary with models and options, but a 40-foot diesel bus costs roughly $525,000, while the same size of pure electric goes for nearly $775,000. Natural gas and hybrid buses are somewhere in between.

But consider lifetime costs, not just the upfront cost, electric bus enthusiasts say. Electricity is cheaper than diesel fuel or gasoline, in most places, most of the time. An electric vehicle's simpler powertrain means lower maintenance and repair costs.

New York City would save 12.5 percent over 12 years in purchase and operating costs if it bought an electric bus instead of a diesel, a 2016 study from Columbia University concluded -- with bigger savings if the vehicle lasted longer, as most buses do.

Foothill Transit, which covers 22 cities from downtown Los Angeles to the east, tried out Proterra buses in 2010 and stuck with them. The agency operates 17 electric buses, all from Proterra, in its 382-bus fleet. It has ordered 13 more, and that's only the start. The top of Foothill's website trumpets: "We're going all electric by 2030!"

"The technology is very robust," said Doran Barnes, Foothill's executive director. "We've had very few problems."

Until recently, limited range was a high hurdle for electric buses. But that issue is fading as battery technology improves.

Proterra recently began selling its latest model, the Catalyst E2, with a 350-mile range. That's enough to run a full day on most routes, Barnes said. BYD's longest range is 275 miles, but the company said it will have a 350-mile model within a year.

Whatever agencies might save in fleet operations, Proterra knows it needs to deal with sticker shock for the technology to be tenable in the long term. "Our goal is to get down to the same selling price as diesel," Ensign said.

The battery is the biggest cost. The same is true in electric cars. Costs are coming down but not fast enough yet to compete, head to head, with combustion engines.

Business on 06/24/2017

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