Proterra Electric Bus Battery Service Agreements

2017 Fire Awards Winner

Champion
Alan Westenskow, Director of Businesses Development, Proterra

About
Bus fleet operators predominantly use diesel vehicles. Zero-emission vehicles offer a clean, quiet alternative with lower operating costs. However, zero-emissions vehicles currently cost 50% more than conventional counterparts and there are perceived technology risks of batteries and the cost of future battery replacements. These barriers obstruct uptake of a cleaner and more efficient disruptive technology.

Proterra’s electric bus battery service agreements are an initiative led by Proterra to transfer up-front costs and technology risk from the customer. This can remove barriers to uptake and enable wider commercialization.

Barriers Addressed
• High upfront costs of electric buses vs diesel buses
• Perceived technology risks of batteries
• Unknown future costs of replacement batteries

Approach
Proterra offers to sell the customer a battery electric bus for the cost of a conventional diesel bus (around $500,000) and to enter into a battery service agreement for 12 years to pay for the use of batteries that Proterra owns and guarantees to provide an agreed upon performance level. This agreement converts a capital cost to an operating cost, which can be paid using operating savings from the cheaper to operate electric bus. Further, the agreement provides a warranty on the batteries and hedges customers against future replacement battery costs. As a result, the customer is expected to have a cost breakeven point on day one compared to conventional diesel buses.

BNEF On-Stage Pitch