A glut of federal and state money is flowing over the next four years and aimed mostly at purchasing electric vehicles and installing the necessary infrastructure to power them.
The State of Sustainable Fleets 2023 Market Brief authored and released Monday by environmental consultants Gladstein, Neandross & Associates (GNA), which produces this week’s ACT EXPO in Anaheim, California and hosts 13,000 attendees alongside hundreds of exhibitors, provides an overview of the new and coming funding opportunities as well as captures the experiences of 225 fleet operators. GNA states the fourth annual report is intended to be a technology-neutral analysis of clean vehicle technology trends, to inform fleet operators and the industry at large.
Editor’s note School Transportation News is an official media sponsor of the ACT EXPO.
For the school bus industry, the main trend of course is toward the adoption of all-electric fleets, as evidenced by the 2,400 electric school buses awarded last year during the initial funding round of the U.S. Environmental Protection Agency’s Clean School Bus Program, which last week announced a year-two competitive grant. Those buses represent 95 percent of the buses awarded, according to the EPA, with the others being propane and CNG.
Title sponsors of the State of Sustainable Fleets 2023 Market Brief are Daimler Trucks North America, Penske Transportation Solutions and Shell, with Dana Corporation a supporting sponsor. This is the fifth year Gladstein, Neandross & Associates has authored the technology-neutral analysis and survey findings.
New York is the first state to mandate new bus purchases starting in 2027 must be zero emissions, with full fleet turnover required by 2035. Other states and localities are following suit. California has led the nation in electric school bus deployments, but despite the state’s Advanced Clean Fleets rule that is setting the bar for the rest of the nation by requiring zero-emissions heavy- and medium-duty trucks and buses by 2045, school buses are not included.
Aside from the $24 billion federal funding that will be available over the next four years, including the $1 billion Clean Heavy-Duty Vehicles grant that is thought to largely target school buses, the report notes that nationwide funding for clean trucks and buses will total another $13 billion. California, New York and Virginia are leaders in providing their own funding of electric school buses through state programs or partnerships with utilities, the report notes. Joining them with similar programs are the likes of Colorado, Nevada, Illinois and Michigan.
Part of that is $300 million in the remaining Volkswagen Mitigation Settlement Funds, which will continue to flow to states until the end of 2026. For example, Broward County in Florida announced last week it is using the money to acquire an additional 60 electric school buses.
The GNA report noted that 65 percent of the truck and bus fleets surveyed have operated at least one electric vehicle over the past year, and 92 percent plan to grow EV use over the next five years. Medium-duty EV orders soared to 30,000 last year, with school buses representing 8 percent of the total. Still, battery-electric vehicles represent only about 4 percent of fleets, with supply chain disruptions and high costs leading the reasons why. The researchers noted that battery prices alone rose 14 percent in the more mature EV passenger car market and drove kWh costs to $270/kWh from $160/kWh. Historically, the report adds, heavy-duty truck battery packs cost approximately two times more.
Meanwhile, price hikes in steel, aluminum, cobalt, nickel, and lithium drove up raw material costs for EVs by 140 percent between May 2020 and May 2022.
Another major barrier to larger-scale EV adoption includes infrastructure availability and reliability. The report states that grid capacity must grow by 60 percent before 2030 and then by another 300 percent by 2050 to meet nationwide electrification goals.
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Meanwhile, further driving interest in EVs as well as CNG, propane and, at least for truck and over-the-road buses, hydrogen fuel cells is the eventual sunsetting of diesel engines amid the strictest emissions requirements to date from the EPA, which go into effect in 2027. Daimler Trucks North America and Navistar—the parent companies of Thomas Built Buses and IC Bus, respectively—have both made public comments that zero emissions are the future.
“EPA’s new Clean Trucks Plan may have effectively set 2027 as the sunset year for new on-road diesel engine development by North America’s HD engine OEMs. Diesel production and sales will continue for some time after,” the report comments.
That is leading also to more acceptance of propane and CNG, which is buoyed by Congress extending a $0.50 per gallon tax credit through next year. For school buses, the latter saw a 46-percent drop in sales last year due to the Clean School Bus Program demand for electric, but the report indicated that demand is expected to increase once again over the next five years. But at least one fewer school bus propane option will be available, as the report noted that Thomas Built Buses will begin phasing out the fuel this year.
Meanwhile, CNG saw a jump last year due to the EPA funds, which represented the first time that federal funds were allocated for natural gas.
The report also noted that the role of renewable fuel, including renewable diesel, propane and CNG will begin playing larger roles in providing a transition from internal combustion engines to all-electric vehicles but must first overcome production challenges.
The ACT EXPO runs May 1 through May 4 at the Anaheim Convention Center. The breakout session “Scaling Electric School Bus Adoption” will be May 3 at 1 p.m. Pacific.