Air pollution caused by vehicles has been emerging as a serious concern for governments across the globe. This, in turn, is driving demand for public transport facilities with lower emissions. According to the World Health Organization (WHO), air pollution causes about 100,000 deaths every year in Europe, reducing life expectancy by an average of one year. Considering the negative impact of pollution on people, governments around the world are working to find solutions to reduce pollution levels. European countries such as France, the U.K., and Germany are emerging as key markets for electric and hybrid electric vehicles.
There are three main categories of electric buses, namely, pure electric, hybrid electric, and plug-in hybrid electric. Pure electric buses use batteries for their operations, while hybrid electric buses use conventional fuel and electric propulsion systems. Plug-in hybrid buses have similar functionality as hybrid electric buses. However, hybrid electric buses store energy when the bus decelerates, whereas plug-in hybrid buses require an external plug-in power source for charging. Power generated in hybrid electric buses is used for high intensity tasks such as accelerating from standstill. The combustion engine later boosts the vehicle’s movement and also recharges the battery.
Unstable fuel prices and depleting crude oil reserves are influencing transport departments and transit agencies globally to increase the number of alternate and new energy vehicles. Some of the transit agencies in developed countries are considering long-term benefits as opposed to short-term costs while purchasing buses. Electric buses require high initial investment. However, their operational cost is significantly low as compared to that of conventional buses as electricity is cheaper than diesel.
Electric bus manufacturing is a capital intensive market. Most large automotive companies have not forayed into the market as it is in the nascent phase. Funding from external investors is one of the key reasons for the growth of electric bus market. For instance, venture capitalists such as Kleiner Perkins Caufield & Byers and General Motors Ventures LLC invested USD 30.0 million in Proterra Inc., an electric bus manufacturing company based in the U.S., in June 2014. Moreover, the company raised over USD 120 million from private equity funding since 2011.
China has been crusading towards its goal of pollution free transportation environment under which it has been focusing on increasing the number of electric vehicles in the country. The government is encouraging the purchase of electric buses in several other ways.
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