Inflection Point

December 31, 2021

0B9A0873 — Attendees were able to get an up-close look at the latest in electric school bus technology at STN EXPO Reno

As I walked the trade show floor at the STN EXPO Reno in December, I witnessed more electric school buses than ever before. Attendee interest in learning more about EV technology and infrastructure was overwhelming. “I need to find the funding and learn about the next steps to setup infrastructure at my transportation center,” said one attendee.

We are at an inflection point as an industry. Many school districts and private school bus contractors are deciding when rather than if they are going to invest in electric or low-emission school buses. The $5 billion earmarked exclusively for school transportation in the infrastructure bill over the next five years will act as a catalyst for accelerated adoption. All the major OEMs and many new entrants are doubling down on this assumption, too.

A panel of OEM reps in Reno all agreed that school transportation is the tip of the spear for large scale commercial adoption of electric school buses. It’s exciting to be at the center of all this innovation and evolution, considering the school transportation industry has been slower to change over the years. Also, consider that in-use electric school bus adoption is hovering at around 1,000 units overall while there are 22,000 propane school buses on the road. Regardless of the fuel choice, it’s good for the environment, our students, and school bus drivers.

Predicting when and why markets will move is a challenging exercise with all the uncertainty of supply chain bottlenecks, staffing shortages, and the pandemic. One thing is clear. There is no end in sight.

Over the years, I’ve used the stock market as a fairly accurate data point of economic health. I keep an eye on major publicly traded companies, particularly those aligned to the school transportation industry, for forward guidance. Overall, reported outlooks are relatively positive. But this forecast is tempered by supply chain challenges, inflation, increasing raw material and labor costs, and volatile fuel prices being cited as areas of concern that could hinder industry growth.

In a recent Blue Bird fiscal year earnings report, new President and CEO Matt Stevenson discussed a new variable pricing model for purchasing school buses while also offering a higher fixed pricing model for customers. Blue Bird CFO Razvan Radulescu also stated that the current business model is unsustainable based on current market conditions, so a new pricing model has been implemented.

Bottom line: Costs of everything are going up in 2022. So, plan accordingly.

A standard benchmark for industry health is new school bus manufacturing data. As reported on page 12, green alternative energy school bus purchases continued a flat trajectory, compared to the previous year, with propane-powered school buses remaining the leader in units produced. But keep in mind that the school bus manufacturers are forecasting that a third to a half of all new school bus sales within the decade will be electric.

Expect to see more headlines about energy and fuel volatility in 2022. School districts and private contractors generally take advantage of bulk fuel purchasing rates, but I’d recommend keeping a close eye on this line item.

I also see diesel fuel costs continuing to trend higher, so look for the acceleration in low emission and electric school buses. They will continue to take a bigger foothold within the school bus industry in 2022. Many school transportation professionals I’ve spoken with are looking forward to accessing infrastructure bill funding to expand their alternative energy fleets and infrastructure.

The engagement of public utilities and the promise of vehicle-to-grid could make school buses an income generating asset, which challenges industry norms with the monetization of electricity and recycling of batteries for the rare earth elements. As global demand and innovation for electric vehicles increases, what will be the impact to our industry?

Property taxes are always a major funding mechanism for operating revenue of municipalities, school districts, and transportation departments. According to the latest outlook by the National Association of Realtors, “Real estate is on firm ground with little chance of price declines,” said Chief Economist Lawrence Yun. He added that he sees high investment in green energy, technology and optimization.

According to a recent STN readership study, over 500 magazine subscribers identified new technology products that they were interested in purchasing over the next 12-months. Additionally, while speaking to numerous suppliers and transportation operators at fall conferences, I heard more of the same with new technology RFPs and bids in process or coming soon.

Be sure to utilize this ultimate resource guide of contacts to research and data to help your team throughout the year discover new products and the companies that sell them.

Editor’s Note: As reprinted in the Buyer’s Guide 2022.

Related: WATCH: STN EXPO Reno 2021
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