Getting electric school buses in the hands of school districts

How can electric school buses be made accessible and cost-effective? In this episode, Highland Electric Fleets CEO Duncan McIntyre makes the case for why school districts should overcome the challenges to bus electrification, and the ways his company’s subscription model helps them do so.

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David Roberts

One of my very favorite things in the world to talk about — second perhaps only to electric postal vehicles — is electric school buses. It's difficult to think of a more righteous cause than reducing air and noise pollution in direct proximity to the country's most sensitive lungs and ears.

Currently, however, electric school buses still cost two to three times what their diesel competitors cost, which can be daunting for school districts with tight budgets. Electric buses pay themselves off over time through dramatically lower fuel and maintenance costs, but the upfront costs of the transition are steep enough to scare away many administrators.

My guest today runs a company called Highland Electric Fleets that is attempting to overcome that challenge by offering a new business model. Rather than purchase and maintain the buses themselves, school districts pay Highland a subscription fee, locked in for a 15-year contract, which covers the buses, a depot, charging infrastructure, scheduling, training, and ongoing maintenance and replacement of buses when required.

In addition to a saving most school districts money immediately, the subscription contract derisks the transition to electric buses. That is about the best thing I can think of that someone could be doing these days, so I was eager to talk to Highland CEO Duncan McIntyre about the advantages of electric buses, the challenges school districts face, and the problems solved by the subscription model.

Alright, with no further ado, Duncan McIntyre, welcome to Volts. Thank you for coming.

Duncan McIntyre

David, thanks for having me.

David Roberts

This is awesome. Volts listeners are so interested in electric school buses, so I just have a gazillion questions, so let's jump right into it. Tell us, what are the advantages or benefits of an electric school bus over the current line of school buses, which as I understand it, are mostly diesel?

Duncan McIntyre

That's right, they're mostly diesel. A little over 80% today. But your question is about the advantages of electric. I think the list is long, but I would highlight a few of the big ones. There's a clear benefit in emissions profile just in the health of everyone who's operating or riding a bus. There's no tailpipe at all, and as a result, they're very clean. Another big advantage is they just operate much cheaper. The fuel is a lot less expensive, there are very few moving parts compared to a diesel bus, and as a result, there's no oil changes, there's no exhaust filters. There's lots of things that just aren't on electric buses, and so operating is much less expensive.

David Roberts

And I don't want to get caught up in the whole thing too early, but I'm trying to sort of conceive of the sort of magnitude of the pollution reductions here. Like, have there been measurements or studies about the difference when an electric school bus replaces a diesel bus? Or are we too early to know for sure about that kind of stuff?

Duncan McIntyre

I think there have been plenty of studies about the health impacts of a diesel bus. And the comparison is simply the health impacts of not having a diesel bus since the electric format has literally no tailpipe and no emissions profile at all. But the health studies have been done by groups like American Lung Association, groups like that, and there's quite a few data points that look at reduction in NOx and particulate matter, specifically on things like pediatric asthma. I would say that's one of the main studies that has taken place, but also tying the emissions associated with the diesel tailpipe to just other general health key indicators.

David Roberts

Yeah, one thing I would toss out too, because people always forget about this, but is noise pollution, which is the research on noise pollution is wild. I don't think people appreciate the effect that has. And all these kids are effectively sitting right next to a jet engine, more or less. It's extremely loud. But the first question that comes up for everybody is they cost more. So what is the current cost differential between an electric school bus and a diesel school bus?

Duncan McIntyre

The electric school bus ranges from $275,000 to $375,000, really, depending on the state you're in. And your question is about the differential. It's about $200,000 of differential on average. So it's a $200,000 premium to buy an electric.

David Roberts

That's not small. That's two or three x the cost.

Duncan McIntyre

That's exactly right. It's not small.

David Roberts

Let's also talk about some of the other barriers other than cost for a school district looking... if I'm in a school district, I have this wild idea I want to replace all our diesel buses with electric buses. The cost of the buses themselves is not the only barrier or challenge I face. What are the other extra challenges that have to be overcome?

Duncan McIntyre

There's a few other buckets. One would be charging infrastructure. You need to establish your depot wherever you operate your buses today as an electrified depot. And that involves installing a whole bunch of new equipment, running an interconnection to bring new power, new electrical service into that depot. I'd say that's one big bucket of sort of a project that's required to get up and running. There's another piece that's all about training. Your workforce needs to be trained. Mechanics need to figure out how to work on these vehicles. Your drivers need to know how to operate them and how to not just operate them, but how to be really comfortable with running them.

And then there's an operating cadence of charging them. The fueling activity is a little bit different. And unlike diesel fuel, with electricity, you really want to pick and choose when you charge and how quickly you charge, as it can result in lower or higher costs and more reliability if done right.

David Roberts

And so that'll get into logistics, right? Like routes and the timing of routes and these kind of things?

Duncan McIntyre

Absolutely, that's right.

David Roberts

And so these are all fairly substantial challenges. So what is the current market penetration here? What is the base we're starting from? Are electric school buses anywhere, or is it still an extremely marginal sort of market?

Duncan McIntyre

We're at an inflection point right now, David. If you'd asked me the question a year ago, I might have said electric buses made up 2% of the