The Environmental Protection Agency’s (EPA) Clean School Bus Program is a game-changer in deploying zero-emission school buses across the U.S. In prior incentive programs — both federal and those from states like California and New York — electric school buses competed with electric or alternative fuel transit buses, trucks and other equipment for funding. Meanwhile, dedicated electric school bus funding was small in scope and primarily available only in specific states, such as California.

The funding environment has changed, thanks to EPA’s Clean School Bus Program. School districts across the country now have the opportunity to realize the operational cost savings and air quality and climate benefits of electric school buses.

For the next five years, the Clean School Bus Program is offering up to $5 billion  to replace existing school buses with zero- or low-emission ones through rebates (first round of applications for $500 million due August 19, 2022) and grants (applications expected to open in Fall 2022). The program will prioritize low-income and high-need areas, rural districts and tribal communities as directed by Congress and as part of the Justice40 Initiative.  

The program earmarks $2.5 billion for electric school buses and another $2.5 billion for zero- and low-emission school buses, including both electric and alternative fuel buses.

Here’s what  school bus operators should know about the market as they explore this opportunity:

3 Things to Know About the U.S. Electric School Bus Market  

1. Demand for electric school buses is growing in the U.S. 

Electric school bus distribution across the U.S.

According to WRI’s data, as of March 2022, 415 school districts or private fleet operators had committed to procuring 12,275 electric school buses across 38 states and a range of operating conditions. The vast majority of these buses come from a contract announced at the end of December 2021 between bus dealer Midwest Transit Equipment and SEA Electric, a manufacturer of commercial electric vehicles. This agreement promises to convert 10,000 diesel school buses to electric ones over the next five years (also known as “repowering”).

Meanwhile, major cities and school districts alike are committing to full electrification. For example, Montgomery County, MD pledged to replace 326 diesel school buses with electric by 2025, New York City committed to an initial 75 electric buses by 2030, and Boston Public Schools committed to 20 electric buses for the 2022-2023 school year.

2. The Clean School Bus Program could help increase the supply of electric school buses.

Electric school bus manufacturing facilities in the U.S.

With the anticipated increase in demand for electric school buses due to the EPA Clean School Bus Program and state and local commitments, the supply chain would need to accommodate thousands more electric school bus orders. By comparison, bus operators have committed to 12,275 electric school buses as of March 2022, about 600 of which have been delivered to-date.

Existing manufacturers are ramping up production to meet growing demand, and new manufacturers continue to enter the field, including those working on electric bus repowers. However, automotive and battery manufacturing supply chains are complex, and it can take years to establish even low-volume production. Manufacturers may hesitate to add a new product or fuel type due to the cost and complexity of changing suppliers and building a customer base. The five-year Clean School Bus Program gives the market certainty that purchase orders leveraging government-subsidized rebates will continue.

In gathering model specifications for a new issue brief, WRI found that 22 electric school bus models were available as of January 2022 from 12 manufacturers for Type A, C and D buses: 14 newly manufactured vehicle models and eight repowered vehicle models. While repowered buses are not eligible in the first round of Clean School Bus Program rebates, this could change in future opportunities.

3. Resources are available to help school districts source electric school buses.

Using WRI’s Electric School Bus Market Study and Buyer’s Guide, school districts and other bus fleet operators can navigate electric school bus product offerings for Type A, C and D buses. Electric school bus manufacturers and dealers are ready to work with customers and have been following incentive programs to offset initial high prices. Purchasers should be aware that there will likely be a long lead time between a purchase order and delivery due to ongoing global supply chain issues — which affect buses of all fuel types — as well as increasing demand. WRI recommends referring to resources like our Power Planner to prepare for charging infrastructure, which can take longer than bus deliveries, and reaching out for free technical assistance resources for planning.

Applications for the first round of Clean School Bus funding are due August 19, 2022. Operators can learn more here.