(Bloomberg) -- For all the talk about electric cars taking over the roads, electric buses still make up less than 0.1 percent of America’s public transportation fleet. Proterra Inc. thinks it’s found a way to change that -- by taking a page from rooftop solar.
The electric-bus maker is partnering with Japanese trading house Mitsui & Co. to lease batteries to public transportation agencies through a $200 million, first-of-its-kind credit facility that will support the delivery of 1,000 electric buses. They’re betting that by lowering the upfront costs of zero-emission buses to compete with diesel ones they can help bring electric buses to the mainstream.
It worked for rooftop solar. A decade ago, solar installers including Sunrun Inc. began offering panels for no-money down and monthly payments. That leasing model ignited a solar boom, with annual U.S. home installations surging from 623 megawatts in 2012 to almost 2,250 megawatts last year.
Ryan Popple, Proterra’s chief executive officer, is hoping for a similar boom for electric buses. “We’re removing the last remaining objection for why cities can’t move faster” toward electrification, he said in an interview.
That’s a challenge the industry has faced even in progressive, environmentally conscious California, where the entire bus fleet is required to go emissions-free by 2040, and yet just 1 percent meets that criteria now.
Another, more bureaucratic reason a leasing strategy might work for electric buses: Some public transportation agencies have separate budgets for buying vehicles and maintaining them. Proterra’s program would allow them to tap their maintenance budgets for a battery lease, just as they would for diesel fuel.
For its part, Mitsui was already a Proterra investor, so the leasing venture builds on that. The company described the program in a statement as “a unique opportunity” to provide capital for an “imminent transition to 100 percent battery-electric bus fleets.”
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