E-BUSES GEN­ER­AT­ING BUZZ IN CAL­I­FOR­NIA

Proterra has added a South­land fac­tory to bol­ster its pro­duc­tion

Los Angeles Times - - BUSINESS - By Russ Mitchell

Tesla’s Elon Musk trans­formed elec­tric cars into ob­jects of de­sire. Can Proterra do the same for the elec­tric city bus? Nope. It’s not even try­ing. “Not sexy, for sure,” Josh En­sign, the elec­tric bus start-up’s chief op­er­at­ing of­fi­cer, said with a laugh.

But looks aren’t ev­ery­thing. The mar­ket for bat­tery-pow­ered elec­tric buses seems ready to rocket. Or­ders in the U.S. are gain­ing trac­tion.

Last week, Proterra said it had raised $55 mil­lion in in­vest­ment cap­i­tal atop $290 mil­lion raised ear­lier. The new money comes from Al Gore’s in­vest­ment fund and BMW’s ven­ture cap­i­tal arm. GM Ven­tures and Kleiner Perkins Cau­field & By­ers had al­ready chipped in.

Proterra Chief Ex­ec­u­tive Ryan Pop­ple said an ini­tial public stock of­fer­ing might hap­pen this year or next.

The Sil­i­con Val­ley com­pany is in­creas­ing its pres­ence in Cal­i­for­nia with a new fac­tory in the City of In­dus­try, south­east of Los Angeles, to sup­ple­ment an ex­ist­ing plant in Greenville, S.C.

“There’s a level of in­ter­est in this field that there wasn’t five years ago,” said Pop­ple, a for­mer fi­nance di­rec­tor at Tesla. (En­sign left Tesla last year as head of man­u­fac­tur­ing.)

About 56,000 public tran­sit sys­tem buses are op­er­at­ing in the U.S. Most burn diesel or gaso­line fuel and spew nasty fumes from in­ter­nal com­bus­tion en­gines into the at­mos­phere.

Ur­ban tran­sit dis­tricts are swap­ping those out for more en­vi­ron­ment-friendly diesel-elec­tric hy­brids and buses that run on com­pressed nat­u­ral gas.

But only pure-elec­tric buses emit no pol­lu­tion from the tailpipe, and them­selves con­trib­ute no green­house gases.

Bat­tery costs have de­clined over the last few years. Elec­tric bus mak­ers claim they will cut the op­er­at­ing costs for public tran­sit agen­cies, and agen­cies that have tested them agree.

“No doubt, elec­tric buses are the fu­ture of bus trans­porta­tion,” said Jerome Lutin, a con­sul­tant who spent 20 years as an ex­ec­u­tive with NJ Tran­sit in New Jer­sey.

Cal­i­for­nia is set to emerge as a cen­ter for elec­tric bus en­gi­neer­ing, de­sign and man­u­fac­tur­ing. And Proterra isn’t the only game in town.

A U.S. off­shoot of Chi­nese bat­tery and ve­hi­cle maker BYD (it stands for Build Your Dreams) man­u­fac­tures elec­tric buses in Lan­caster. The com­pany and its 600 em­ploy­ees also make trucks, bat­tery packs, LED light­ing sys­tems and bat­tery stor­age sys­tems, and the op­er­a­tion is ex­pand­ing.

Com­plete Coach Works retrofits buses with elec­tric pow­er­trains in River­side. Ebus makes fast charg­ing sta­tions for elec­tric buses in Downey.

Tra­di­tional bus mak­ers Gil­lig, based in Liver­more, Calif., and New Flyer in Canada’s Man­i­toba prov­ince, of­fer elec­tric mod­els.

Electrics rep­re­sent a tiny frac­tion of to­tal bus sales. Fewer than 1% of tran­sit sys­tem buses across the U.S. are pure bat­tery pow­ered.

Price is a big rea­son. The num­bers vary with mod­els and op­tions, but a 40-foot diesel bus costs roughly $525,000, while the same size of pure elec­tric goes for nearly $775,000. Nat­u­ral gas and hy­brid buses are some­where in be­tween.

But con­sider life­time costs, not just the up­front cost, elec­tric bus en­thu­si­asts say. Elec­tric­ity is cheaper than diesel fuel or gaso­line, in most places, most of the time. An elec­tric ve­hi­cle’s sim­pler pow­er­train means lower main­te­nance and re­pair costs.

New York City would save 12.5% over 12 years in pur­chase and op­er­at­ing costs if it bought an elec­tric bus in­stead of a diesel, a 2016 study from Columbia Univer­sity con­cluded — with big­ger sav­ings if the ve­hi­cle lasted longer, as most buses do.

Foothill Tran­sit, which cov­ers 22 cities from down­town L.A. east­ward, tried out Proterra buses in 2010 and stuck with them. The agency op­er­ates 17 elec­tric buses, all from Proterra, in its 382-bus fleet. It has or­dered 13 more, and that’s only the start. The top of Foothill’s web­site trum­pets: “We’re go­ing all elec­tric by 2030!”

“The tech­nol­ogy is very ro­bust,” said Do­ran Barnes, Foothill’s ex­ec­u­tive di­rec­tor. “We’ve had very few prob­lems.”

Un­til re­cently, lim­ited range was a high hur­dle for elec­tric buses. But that is­sue is fad­ing as bat­tery tech­nol­ogy improves.

Proterra re­cently be­gan sell­ing its lat­est model, the Cat­a­lyst E2, with a 350-mile range. That’s enough to run a full day on most routes, Barnes said. BYD’s long­est range is 275 miles, but the com­pany said it will have a 350-mile model within a year.

What­ever agen­cies might save in fleet op­er­a­tions, Proterra knows it needs to deal with sticker shock for the tech­nol­ogy to be ten­able in the long term. “Our goal is to get down to the same sell­ing price as diesel,” En­sign said.

The bat­tery is the big­gest cost. The same is true in elec­tric cars. Costs are com­ing down but not fast enough yet to com­pete, head to head, with com­bus­tion en­gines.

Proterra and BYD Amer­ica are duk­ing it out over bat­ter­ies as well as buses. Proterra as­sem­bles its own bat­tery packs. BYD started out as a bat­tery com­pany in China and boasts its own bat­tery cell tech­nol­ogy. Both are hard at work try­ing to boost bat­tery per­for­mance while low­er­ing costs.

Bus mak­ing re­mains an old fash­ioned busi­ness, re­ly­ing more on hu­man hand­i­work than ro­bot au­to­ma­tion. More ef­fi­cient man­u­fac­tur­ing could bring prices down.

Proterra has been build­ing buses in its Greenville, S.C., fac­tory since 2011. The new City of In­dus­try plant gives the com­pany a chance to re­fine the build­ing proc-

ess.

The plant man­ager is Paul Mot­tram, 49, a na­tive of Liver­pool, Eng­land. An aero­space in­dus­try vet­eran, Mot­tram be­gan his ca­reer with Toy­ota in the United King­dom, where he was steeped in that com­pany’s famed “lean” man­u­fac­tur­ing sys­tem, which re­lies on bot­tom-up em­ployee par­tic­i­pa­tion for con­tin­u­ous im­prove­ment.

He joined Proterra, he said, thrilled at the idea of a man­u­fac­tur­ing op­er­a­tion built from scratch.

“We’re cre­at­ing the culture to­day that we want to have in the fu­ture,” he said. “You don’t get many chances in your life­time to be in a start-up com­pany with this kind of green­field op­por­tu­nity.”

About 40 em­ploy­ees are at work in­side the mas­sive, win­dow­less City of In­dus­try ware­house, which is like every other build­ing in eye­sight. Ex­cept for some drilling, it’s more quiet than you’d ex­pect. No ca­caphonous clang­ing from metal stamp­ing ma­chines here. White car­bon-fiber­glass shells have been shipped in from a com­pany that makes fiber­glass bodies for the Chevy Corvette. Work­ers at­tach bat­ter­ies, mo­tors, sus­pen­sion sys­tems, win­dow glass and pas­sen­ger seats.

“Our first bus took a year to build,” said Brett Jor­gensen, drill in hand. “Now we’re aim­ing at a bus a day, and we’re get­ting close to that.”

Jor­gensen, 39, moved to L.A. from the South Carolina plant. He nod­ded with a wide smile when asked if he’s happy about that. Most work­ers are lo­cal.

Mot­tram said the L.A. area is rich in man­u­fac­tur­ing tal­ent, and “we’re only look­ing for rock stars and A-play­ers.” At least as im­por­tant as tech­ni­cal skill, he said, is “per­sonal charm,” a taste for con­stant im­prove­ment, and ea­ger­ness to work on a team. The plant will hire at least 20 more work­ers this year, with more to come if the com­pany con­tin­ues to grow.

How much it can grow, and how fast, is a big ques­tion for Proterra em­ploy­ees, and for its ven­ture cap­i­tal in­vestors.

Pol­i­tics plays a big part in bus in­dus­try fund­ing. Gov­ern­ment, through taxes, pays the bulk of tran­sit sys­tem costs, in­clud­ing new bus pur­chases.

Fed­eral and state demon­stra­tion grants have kick­started the elec­tric bus in­dus­try. Proterra’s City of In­dus­try plant won a $3-mil­lion grant from the Cal­i­for­nia En­ergy Com­mis­sion. While Cal­i­for­nia of­fi­cials dou­ble down on cut­ting green­house gas emis­sions, con­tin­ued sup­port from the Trump ad­min­is­tra­tion and the Repub­li­can Congress is ques­tion­able, at best.

Diesel en­gines on masstran­sit buses have few fans, but not all tran­sit agen­cies are ready to give up on nat­u­ral gas. The Metropoli­tan Trans­porta­tion Author­ity plans to or­der 1,000 new buses soon: 200 elec­tric, 800 nat­u­ral gas. L.A. Mayor Eric Garcetti sent Metro a let­ter in May, push­ing it to go 100% elec­tric by 2030.

Whether it’s 200 or 1,000 elec­tric buses, Proterra and BYD are fight­ing hard for those or­ders. Be­yond their prod­ucts, Proterra is push­ing its Amer­i­can roots and BYD, its union­ized work­force.

BYD’s se­nior vice pres­i­dent, Macy Ne­shati, also takes a dig at Proterra’s start-up sta­tus: “Proterra makes a lot of noise right now, but it would be un­prece­dented for a start-up com­pany like that to sur­vive in this mar­ket.”

If it thrives, Proterra will need to ex­pand to other mar­kets at some point to reach lev­els of growth that ven­ture cap­i­tal­ists de­mand. Each year, tran­sit agen­cies pur­chase about 5,000 buses, with or­der growth ex­pected at a de­cent but un­spec­tac­u­lar 8% rate, ac­cord­ing to re­search and con­sult­ing firm Frost & Sul­li­van.

Proterra en­vi­sions it­self mov­ing into school buses, mo­tor coaches, garbage trucks, de­liv­ery vans, even rail­road yard switch­ing en­gines.

First though, it has got to prove it can bring some siz­zle to the un­sexy tran­sit bus.

Pho­to­graphs by Mar­cus Yam Los Angeles Times

PROTERRA has been mak­ing elec­tric buses in South Carolina since 2011. It is based in Sil­i­con Val­ley, and Cal­i­for­nia is set to be­come a cen­ter for elec­tric bus en­gi­neer­ing, de­sign and pro­duc­tion. Its new City of In­dus­try plant of­fers a chance to re­fine the build­ing process.

FEWER THAN 1% of tran­sit sys­tem buses across the U.S. are pure bat­tery pow­ered, and price is a big rea­son. Above, at the City of In­dus­try plant.

OR­DERS FOR elec­tric buses are gain­ing speed, but gas and diesel mod­els dom­i­nate the mar­ket. Above, parts are as­sem­bled.

WORK­ERS LINE up ca­bles un­der an elec­tric bus at the Proterra man­u­fac­tur­ing plant in City of In­dus­try.

Mar­cus Yam Los Angeles Times

PROTERRA’S CUS­TOMERS in­clude Foothill Tran­sit, which cov­ers 22 cities from down­town L.A. east­ward. The agency op­er­ates 17 elec­tric buses in its fleet, all from Proterra, and aims to go all elec­tric by 2030.

Mar­cus Yam Los Angeles Times

PROTERRA en­vi­sions ex­pand­ing into more types of ve­hi­cles, in­clud­ing school buses and garbage trucks.

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