Buses are the most common form of public transport worldwide and are an integral part of billions of daily commutes. From Mumbai to Amsterdam, buses offer cheap and accessible transportation for people to get to work, leisure, and a whole host of other destinations. Buses have been the workhorses of urban transport for almost a hundred years, and for most of that time, they have run on diesel engines. In the last decade, there has been a dramatic shift in technology, with quiet, efficient, and emissions-free electric buses taking to the streets in increasing numbers. IDTechEx estimates that around 60,000 electric buses were sold in 2023, with this number forecast to reach over 180,000 by 2045. This equates to a CAGR of 5.3% over the next twenty years and is one of the key findings of IDTechEx's new research report, "Electric and Fuel Cell Buses 2025-2045: Markets, Players, Technologies and Forecasts". The report also explores the enabling technologies behind electric buses and evaluates the current deployment and outlook of electric bus categories such as full battery electric, fuel cell, and hybrids.
Electrification of buses has been explored as prototypes for many years, but it wasn't until the early 2010s in China that they began to see widespread use. Spurred by generous government support, many cities began to roll out ambitious electric bus programs that were unprecedented in their scale. They were so successful that in 2016 alone, IDTechEx estimates there were over 135,000 battery, fuel cell, and hybrid electric buses sales. A combination of subsidy withdrawal and saturation of key cities has led to a period of declining domestic sales, stabilizing at around 60,000 per year. In many cities, the electrification of buses is well over 90%, meaning there simply aren't enough diesel buses to replace to maintain the high levels of sales seen in 2016.
By contrast, the rest of the world has been sluggish in its adoption of electric buses. However, the sustained and widespread success of electric buses in China proves that this is not an emerging technology but a fully mature, tried-and-tested route to emissions reduction that has been carrying billions of passengers for well over a decade. In the past few years, momentum outside of China has been growing. Europe, the US, Latin America, India, and many more regions are now in the early stages of mass deployment of electric buses. Although sales in China still dwarf all other regions combined, a clear trend of growing electrification is emerging globally. IDTechEx predicts that China's 82% market share in 2023 is set to decline drastically as other regions follow the trend of electrification.
New markets lead to new players
IDTechEx has tracked the global and regional electric bus sales leaders and found growing diversity among OEMs. Chinese giants BYD and Yutong have built on their enormous domestic successes and have begun exporting buses to customers as far away as Norway, Kazhakstan, and Columbia. Vertical integration, supply chain dominance, and economies of scale have allowed these companies to harness their early head start to cement a dominant position in foreign markets. However, legacy OEMs in Europe and America are waking up, with experienced bus makers such as MAN, Mercedez, Volvo, New Flyer, and many more accelerating their efforts to bring electric buses to market. On top of these players, pure electric bus start-ups like Ebusco are also competing for a share of what IDTechEx expects to be a US$50 billion market by 2045. IDTechEx's "Electric and Fuel Cell Buses 2025-2045: Markets, Players, Technologies and Forecasts" report details market share and growth by key regions, including China, the US, Europe, and India.
Technical developments in motors and batteries
Shifting from diesel to electric powertrains also presents new opportunities and challenges for OEMs. Without the reliance on a combustion engine, motor mounting becomes a point of differentiation, with IDTechEx tracking OEMs and tier-1 suppliers who produce/incorporate central motors vs the newer axle-integrated approach. Central motors are closer in design to the legacy diesel powertrains and are currently employed by many legacy OEMs, but IDTechEx expects the efficiency and weight savings of integrated axles to make these the de facto choice for electric buses.
While Li-ion is the dominant battery, cathode chemistry varies by OEM and supplier. LFP is dominant in the Chinese market, but Europe and America see far more use of NMC and NCA. Each chemistry has benefits and drawbacks, and IDTechEx has compared several key metrics, including capacity, voltage, cycle life, cost, safety, and fast charge capability. IDTechEx has also extensively investigated various battery pack/cell and OEM supplier relationships to provide an overview of the opportunities in the battery market for buses.
Hydrogen, hybrid, or battery electric: which will win out?
Electrification can take several forms, and buses are reaching markets that use hydrogen fuel cells, run purely on batteries, or have a hybrid system combining a diesel generator. In the report "Electric and Fuel Cell Buses 2025-2045: Markets, Players, Technologies and Forecasts", IDTechEx has examined the relative deployments of each of these drivetrains and assessed the technical, emissions, and economic strengths and weaknesses of each. Battery electric is the current dominant form, and IDTechEx predicts this will continue. Improvements in battery energy density (kWh/kg) and Li-ion cost reductions have, in large part, addressed the biggest challenge of fully electric buses - range. Cheaper and denser cells are now commonplace, and IDTechEx research reveals a growing average onboard capacity (kWh) in buses, particularly in Europe and America. Hydrogen fuel cell buses promise greater range and operational flexibility (due to quicker recharging times), but fundamental issues remain with hydrogen distribution infrastructure.
This report also examines the capital costs of various fuel-cell electric bus projects. Although prices are decreasing, economies of scale have not yet brought fuel-cell buses anywhere near diesel bus prices. Nevertheless, IDTechEx expects the market for fuel-cell buses to grow in part due to its benefit in ultralong haul coach travel, and also specific regions with ambitious national hydrogen policies like Japan and Korea. IDTechEx expects hybrid buses to continue to be phased out due to their higher cost and complexity and limited emissions reductions. "Electric and Fuel Cell Buses 2025-2045: Markets, Players, Technologies and Forecasts" forecasts the number of buses sold by each drivetrain up to 2045 and includes ancillary forecasts such as battery demand (GWh) and value by drivetrain (US$ Billions).
