Public Transportation in the EV Age: Sustainable Public Transport Financing

The global push towards decarbonization is rapidly transforming the landscape of public transportation. Electric buses (eBuses) are emerging as a key solution to reduce emissions and meet ambitious climate goals. However, the transition to electric public transportation presents not only opportunities but also complex financial challenges.

“It's not just about replacing vehicles,” says Alexander Sneep, eMobility Global Program Manager and Business Development at DLL: "It requires a holistic approach encompassing infrastructure, charging, energy procurement and operational changes - a complete transformation of the value chain.”

The rise of eBuses

Electric buses are rapidly gaining traction in cities worldwide. In Europe, the shift towards eBuses is particularly pronounced. A 2024 Rabobank article highlights the accelerated adoption of electric buses, with diesel buses being phased out at a faster pace than initially anticipated. Over 42 percent of city buses across Europe now operate as zero-emission vehicles. The UK alone saw 1,206 new electric buses registered in 2023, up from 685 in 2022. This trend is mirrored globally, with Bloomberg New Energy Finance projecting that eBuses will exceed 60 percent of global bus sales by 2030.

This transformation is fueled by a number of factors. Stringent emission reduction targets are at the forefront, with cities and countries implementing increasingly ambitious goals to curb greenhouse gas emissions. The Paris Agreement sets a long-term vision for a carbon-neutral future, driving policy changes at all levels of government. Governmental support plays a crucial role, with many regions providing subsidies and incentives to encourage the adoption of electric buses and the development of supporting infrastructure.

Curious about how countries are supporting the shift to eMobility across the globe? Explore our comprehensive guide on subsidies and incentives for last-mile delivery.

Additionally, technological advancements are continually improving the viability of eBuses. Continuous improvements in battery technology, charging infrastructure, and the buses themselves are making eBuses more efficient, reliable, and cost-effective.

“Every step taken towards electric public transportation contributes to a greener future. It represents an exciting opportunity to reimagine our urban mobility, bringing together environmental sustainability and technological innovation," comments Sneep.

Preparing for 2030 and beyond

The European Union has set ambitious targets for reducing emissions from heavy-duty vehicles, including buses. This regulatory push, along with growing environmental concerns, is driving the rapid adoption of eBuses across Europe.

To be prepared for the changes in the transportation sector by 2030 and the long-term goals of the Paris Agreement, public transport operators need to act decisively. This involves developing a comprehensive electrification strategy that assesses current transportation needs, projects future demand, and defines a clear roadmap for eBus adoption. This strategy should be flexible enough to adapt to technological advancements and changing regulations while providing a solid foundation for long-term planning.

“Evaluating financing options is another step in the decision-making process,” continues Sneep. “Operators could explore various leasing solutions, considering the inclusion or exclusion of residual value, and select the most suitable approach based on their financial situation and risk tolerance. This may involve a combination of traditional financing methods and innovative approaches tailored to the unique characteristics of eBus fleets.”

Ready to go electric? Find out how your business can successfully navigate the transition to electric vehicles and embrace the future of transportation in our blog: Navigating the electric vehicle landscape

eBuses for airports: A special case

Airports present unique opportunities and challenges for eBus adoption. The transportation needs at airports often involve a complex network of services. Shuttle services are essential for transporting passengers between terminals, parking lots, and nearby hotels, while employee transportation is crucial for connecting staff with various airport facilities, often covering large distances within the airport complex. Additionally, connecting transportation links airports to public transportation networks in surrounding areas, integrating the airport into the broader urban mobility ecosystem.

eBuses are ideal for these applications, providing a quiet, clean, and efficient transportation solution. However, investing in eBuses for airports requires addressing specific considerations. High operational demands are a primary concern, as airport buses operate frequently and often require fast charging capabilities to minimize downtime. This necessitates not only advanced battery technology but also strategically placed charging infrastructure.

Diverse fleet requirements add another layer of complexity. Airports may need a mix of eBus sizes and configurations to meet varying passenger and luggage capacities. This diversity can complicate fleet, financing and maintenance strategies, requiring flexible solutions that can accommodate a range of vehicle types.

Integration with existing infrastructure is also crucial. Charging infrastructure needs to be strategically placed and integrated into the airport's layout and energy systems. This often involves coordination with multiple stakeholders and may require significant modifications to existing electrical systems.

A value chain approach to financing

“The switch to electric public transportation necessitates a value chain perspective on financing,” explains Sneep. “It's crucial to consider the entire ecosystem, from vehicle acquisition to infrastructure development and energy management.”

First, vehicle financing is a critical component. Securing funding for the purchase or lease of eBuses is essential, especially considering that they typically have a higher upfront cost than traditional diesel buses. This requires creative financial solutions that balance the long-term benefits with shorter contract periods or budget constraints

Second, charging infrastructure demands significant planning and investment. This includes not only the installation of charging stations but also grid upgrades and the implementation of smart charging technologies to ensure efficient and reliable charging operations. The infrastructure must be able to support the entire fleet, considering peak demand times and the potential for future expansion.

Third, energy management plays a vital role in the sustainability of eBus operations. This involves exploring renewable energy sources, implementing energy storage solutions, and developing smart grids to power eBus fleets sustainably. The goal is to minimize the environmental impact of the energy used to charge the buses, enabling the transition to electric, which in turn can potentially reduce overall emissions.

Lastly, asset management is crucial for optimizing the lifecycle of eBuses. This includes developing strategies for maintenance, planning for battery replacement, and considering the eventual disposal or recycling of vehicles. Effective asset management maximizes the value of the investment while minimizing environmental impact throughout the lifecycle of the buses.

Meeting the financial demands of this multifaceted transition requires collaboration among various stakeholders. While public transport operators are at the forefront, seeking efficient and sustainable ways to electrify their fleets, original equipment manufacturers (OEMs) play a crucial role in developing and supplying high-quality eBuses and related technologies while financial institutions are essential partners in this transition, providing tailored financing solutions such as leasing options that align with the specific needs of public transport operators and OEMs.

Government agencies round out this collaborative effort by offering incentives, grants, and supportive policies to facilitate the transition. Their involvement can help offset initial costs and create a regulatory environment that encourages the adoption of electric public transportation.

Is Your Fleet Ready for the Electric Revolution? Discover the latest trends and expert insights on the rapidly growing commercial EV market in our blog, eMobility for business: Global trends in commercial electric vehicle sales and adoption

Drive your electric future with expert partners

"Partnering with experienced eMobility experts is essential for success”, explains Sneep. “Public transport operators should seek collaboration with financial institutions and technology providers that have a proven track record in financing and supporting the transition to electric transportation. These partnerships can provide valuable insights, access to cutting-edge technologies, and financial solutions that align with the operator's long-term goals."

Different operators have different needs, which is why flexible leasing solutions are crucial for successful eMobility adoption. Financial leasing offers a path to ownership, while operating leases provide more flexibility with lower monthly payments. Some customers prefer to include a residual value in their agreements to reduce monthly costs, while others opt to exclude it for complete asset control. The key is finding the right combination that aligns with each operator's financial strategy, operational requirements, and long-term sustainability goals.

With deep industry expertise in financing electric vehicles, a dedicated eMobility team, and a range of flexible leasing solutions, DLL is well-positioned to support public transport operators and OEMs in their transition towards a sustainable future. DLL's asset management capabilities and knowledge of the entire EV value chain provide valuable support throughout the lifecycle of eBuses, ensuring financial efficiency and environmental responsibility.

"The transition to electric public transportation is here to stay; it's a necessary evolution in our approach to urban mobility. By embracing eBuses and developing innovative financing solutions, we can create cleaner, quieter, and more sustainable cities for future generations," concludes Sneep.

For more information on how DLL can help you navigate the complexities of eMobility financing, please contact us. Together, we can drive the transformation of public transportation and create a more sustainable world.