Dec 19, 2022 - Technology

Electric school buses are practically free now

Photo of an electric school bus parked in front of a school

Dearborn (Mich.) Public Schools took delivery of its first electric school bus last week. Photo courtesy of Blue Bird

Federal and state governments are practically giving away electric school buses, and if your local district doesn't have its hand up yet, it should. The math is a no-brainer.

Why it matters: Exhaust from diesel school buses makes kids sick and curbs cognitive development. Plus, diesel buses emit greenhouse gases that contribute to climate change.

  • Electric school buses are a cleaner, safer alternative, and they're cheaper to operate — it costs about 14 cents a mile for electricity compared to 49 cents per mile for diesel fuel, according to Blue Bird, a leading school bus manufacturer.
  • They can also act as giant batteries to store surplus energy when not in use. That means cash-strapped districts can earn money from their parked buses by selling power back to the grid during times of peak demand.

The catch: An electric school bus costs $350,000 to $450,000 — three to four times a traditional diesel bus — and most districts can't afford the upfront expense, despite the long-term savings.

What's happening: A bunch of new government incentives make replacing aging diesel fleets an easy call.

  • The five-year, $5 billion Clean School Bus Program, approved in November 2021 as part of the infrastructure law and run by the Environmental Protection Agency, pays school districts up to $375,000 to replace a diesel bus with an electric one.
  • The government offers another $20,000 for charging infrastructure, for a total of $395,000 per bus purchased.

In October, EPA awarded the program's first $1 billion to fund about 2,500 school bus replacements in nearly 400 districts.

  • Priority was given to low-income, rural and tribal communities like Dearborn, Michigan, near Detroit, which took delivery of its first electric school bus last week and expects to buy 18 more with a $7.1 million federal grant.

Many states offer generous rebates, too, including California, Colorado, New York, Connecticut and others.

  • Some local utilities also provide financial incentives to support school bus electrification.
  • Congress included another $40,000 rebate for commercial vehicles, including school buses, in the Inflation Reduction Act, signed in August.

The best part: All these grants and rebates can be layered, which means the savings can really add up.

  • "All of a sudden, schools are looking at free, or more-than-free, school buses," says Tim Reeser, CEO of Lightning eMotors, which makes electric powertrains.

The intrigue: Could school districts take advantage of all these incentives to profit on bus electrification?

  • It's possible, but it depends on how the rules of each program are applied. Don't expect EPA to reimburse school systems more than the cost of a bus.
  • EPA says further guidance is expected soon from the Treasury Department.
  • And besides, there are other costs associated with electrification, such as new charging stations or potential electrical upgrades.

The bottom line: School bus manufacturers are rapidly scaling up production to meet surging demand.

  • "We've absolutely seen a groundswell in applications and the number of schools who were interested in electric buses who historically were not," says Britton Smith, Blue Bird's senior vice president of electrification and chief strategy officer. "It's really changed the game."


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