The electric bus market is growing due to strict government regulations on carbon emissions, declining battery prices, and increasing government support for electric transportation modes. A study by P&S Intelligence estimated that by 2025, the worldwide electric bus (e-bus) sales will stand at 331,327 units, advancing at a 16.6% CAGR during the forecast period 2018–2025. Electric buses are those that either solely run on electric batteries or on a combination of a battery and internal combustion engine.

Since public transit authorities are the major buyers of e-buses, the sale of less 10 m variants has been contributing to the electric bus marketgrowth. Rising concerns about greenhouse gas emissions have led governments in several countries to phase out their gasoline or diesel buses. Public authorities are actively giving grants and funding to encourage the manufacture of e-buses. For example, the Federal Transit Administration under the U.S. Department of Transportation offered a $55 million competitive funding in 2017 for buying or leasing zero or low-emission buses.

Another reason for strong government support for e-buses are increasing crude oil prices. A major chunk of the expenditure of developing countries goes into purchasing crude oil; therefore, to decrease their expenditure, governments are encouraging the adoption of e-buses. Though little costly than conventional buses, e-buses are cost-effective in the long run, as these help save the heavy expenses incurred due to crude oil import. Therefore, their dual importance is expected to take the market toward a bright future.

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Declining electric battery costs is as much of significance in the electric bus market growth as government support. There has been a significant increase in battery production, particularly in China, which has led to a considerable decline in battery prices. As almost 40.0% of the bus cost is attributed to its battery, a further reduction in battery prices is expected to affect the market positively. Further, battery manufacturers are working tirelessly to increase the output power in order to give bus customers more value for their money.

Therefore, we see due to their environment-friendliness and cost-effectiveness, e-buses are set to become the future of mass transit.