Electric buses are having a moment as falling battery costs make them increasingly competitive with diesel vehicles, and local and state clean-air and climate policies help drive deployment.
Driving the news: Major oil companies have approached electric bus maker Proterra — a heavyweight in the U.S. market with more than 300 buses delivered to cities and transit agencies and hundreds more on order — about investing in the company, but CEO Ryan Popple tells me he's steering clear for now.
I sat down with Popple, who told me why he's skeptical of funding from Big Oil, regions where the company is eyeing possible expansion in the future, and the opportunities beyond buses.
Here are a few takeaways...
Battery costs: Popple said battery costs when he became CEO in 2014 were 4-5 times higher than they are today. That improvement rate won't continue now that they're in the $200s per kilowatt-hour range, he said, predicting annual cost declines the single digit percent in the next few years.
Fuel costs: A Bloomberg NEF analysis last year said that e-buses are already competitive with diesel on a total lifetime cost basis, owing to the price of liquid fuel. Popple tells me...
- “Ultimately our goal is to get the bus to parity with the diesel bus, not on a TCO [total cost of ownership], on an up-front basis,” Popple says.
- “I don’t think we’ll ever get all the way there, because I actually think that once we’re within a 2-year fuel payback, the diesel bus market goes extinct,” he adds, referring to the idea that the higher up-front cost of the e-bus is made up within 2 years.
- He predicts that a tipping point will be when e-buses are down to $100,000 more than a diesel bus in up-front costs.
Expansion: The company entered the Canadian bus market last year and also sells battery packs to Europe, but Popple says attempts to compete head-on in Europe against legacy automakers would not make sense.
Emerging markets: Popple is cautiously thinking about emerging market economies, including Latin America and India — places he envisions Proterra potentially teaming up with home-country partners.
Big Oil: Popple revealed that the venture capital arms of major oil companies have made inquiries about potentially investing in Proterra, which has raised over a half-billion dollars overall, including a $155 million round closed last September.
- Popple credits oil majors for making more moves on climate change recently, but he remains wary.
- “I would be worried to really disclose what we are up to, what our strategy is, to an oil major until you really see shareholders and boards of directors state that, all right, this is our carbon budget for the next 25 years, we are going to ride out oil, but we are going to actively invest in the energy transition,” he says.