Ryan Popple, the newly installed CEO of electric bus manufacturer Proterra, faces a daunting challenge. Convincing municipal governments to spend $850,000 on its buses rather than buying to nearly three $300,000 diesel buses.
Popple does, however, have a track-record that suggests that he might be able to do just that. He joined Tesla Motors Inc (NASDAQ:TSLA) in 2007 when the fledgling startup had a mess of problems. The company’s Roadster was costing more to manufacturer than Tesla was asking for in pre-orders. Popple went to work on the supply chain and drove vendors to lower their prices in order to keep Tesla afloat. Tesla is hardly just treading water anymore and is one of the great American manufacturing stories since World War II.
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Depending on electricity costs, Proterra’s 40-foot, 80 passenger bus which has no emissions and makes hardly a sound, requires just $5,000 to $10,000 to keep it running for the year. Diesel buses require about $50,000 a year while natural gas powered buses need about $30,000 to keep moving and delivering passengers to their jobs and homes.
“We’ve seen paybacks against diesel and hybrids in as little as two years and as long as six years,” says Popple. It’s that understanding that has led Popple to find around $100 million in outside funding including $40 million in funding announced today. That funding was led by Kleiner Perkins Caufield & Byers, GM Ventures, and the Pritzker family’s Tao Invest.
Proterra: Range remains a problem
Facing the company is the daunting challenge of extending the buses’ range beyond the present 50 miles on a full charge that hampers its adoption nationwide. To combat this limit, Proterra has developed a $600,000 station that can fully charge the vehicle in around 10 minutes. Three months ago, Reno, Nevada began using four buses made by the company to cover a six-mile loop.
That loop takes roughly 20 minutes and following the completion of the circuit Reno has been partially charging the bus for two or three minutes before setting out once again.
“We are buying into a vision here,” says David Jickling, the director of public transportation for the city’s regional transportation commission. Jickling hopes to get approval for an additional 20 buses if Reno votes to expand its bus lines. For a company that has sold just 50 buses to 11 cities that would be quite the sale.
TechNavio estimates the global market for electric buses at $9.2 billion including those that use overhead wires. That market is expected to grow to $19.5 billion by 2018 given the work of battery-equipped buses like Proterra’s and those of Volvo, Siemens and others.