Electric Bus Market Exceeded $28 Billion in 2020, Growing at 11% Annually to 2027

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by | Mar 23, 2021

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(Credit: Pixabay)

The electric bus market size exceeded $28 billion in 2020 and is expected to grow at 11% compound annual growth rate (CAGR) between 2021 and 2027. The market is forecast to grow at an exponential rate due to the rapid increase in uptake of electric buses as a sustainable mode of transport. This is according to a new report by Global Market Insights.

Electric buses are primarily operated by the integrated electric batteries. This also includes plug-in hybrid buses and fuel-cell electric buses. The report says stringent emission regulations and directives imposed by governments across the globe will propel the adoption of electric buses. In 2019, France announced its 100% zero-emission vehicle target for 2040. As a part of the Paris Climate agreement, the country passed a law to ban ICE vehicle sales by 2040.

Electric buses are 100% eco-friendly as they operate on electrically-powered engines. They do not release smoke or toxic gases into the environment as they operate on a clean energy obtained from battery packs. Several benefits of electric buses, such as low maintenance costs and reduced pollution by emissions, are augmenting their representation in the market.

The increasing focus of several countries, such as India, China, and Canada, on promoting electrification of public transport is providing lucrative growth opportunities, according to GMI. Initiatives undertaken by several governments to reduce the carbon footprint of public transportation are boosting the electric bus market size through 2027.

One of the major factors hampering the market growth is the high initial purchase cost associated with the electric buses, the report notes. The procurement of new hybrid and electric buses requires heavy down payments and large capital investments. Additional costs, such as interest on loans, licensing cost, insurance cost, taxes and storage cost, further add to the total cost of ownership of these buses, hindering the market demand. The market is also hampered by the lack of adequate charging infrastructure.

The electric bus industry has been significantly impacted by the prevailing situations of COVID-19. The manufacturing of electric buses has been affected and sales numbers also decreased because of mass quarantines and lockdown during the first two quarters of 2020. Industry players have faced challenges on account of shortage of capital and financial insecurities caused by the decline in revenues. However, the market is expected to witness steady growth subject to the revival of global economic conditions in 2021, supported by policy changes and government support.

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