All About Total Cost of Ownership (TCO) for Electric School Buses
With lower fuel expenses, reduced maintenance costs, and funding opportunities to offset purchase costs, the total cost of owning an electric school bus can be significantly less than a diesel-burning school bus.
When thinking about the transition to electric school buses (ESBs), school districts and private fleet operators should not only consider the upfront costs – they should also evaluate the lifetime costs of transitioning their fleet.
Total Cost of Ownership (TCO) is the sum of all current and future capital and operating expenses associated with the ownership of an asset, and it’s an important consideration when purchasing a new school bus.
For school buses these expenses include:
- upfront purchase price of the vehicle
- upfront purchase price and operating cost of refueling infrastructure (e.g. charging infrastructure for an ESB)
- upfront grants or incentives to subsidize purchases
- future annual fuel expenditures
- future cost of maintenance and repair
- registration fees and insurance
- any revenues from energy or environmental market payments
According to Electric School Bus Initiative analysis, a school district operating an ESB can expect to see over $100,000 in lifetime fuel and maintenance savings, compared to an equivalent diesel bus, which can help offset the currently higher purchase price of an ESB. That’s over $7,000 per year!
According to Electric School Bus Initiative analysis, a school district operating an ESB can expect to see over $100,000 in lifetime fuel and maintenance savings, compared to an equivalent diesel bus.
Comparing electric school bus funding scenarios
Despite near-term fluctuations as the market adjusts to increased demand stemming from federal and state funding programs and state transition requirements, experts anticipate meaningful upfront price drops over the next decade as battery costs decline and the electric vehicle industry achieves efficiencies of scale in component markets and manufacturing.
From this projected price decline, we anticipate that the lifetime total cost of ownership (TCO) of electric school buses, even without subsidies or incentive programs, will achieve cost parity with diesel-burning school buses by the end of this decade. In the meantime, funding and financing options, such as those detailed in this Clearinghouse of Electric School Bus Funding and Financing Opportunities, will remain important.
The analysis below includes the cost of a networked 19kW level two charger and associated construction and installation on the customer’s side of the meter. For information on alternative charger options and tradeoffs, see our All About Charging Infrastructure video series.
ESB + New York State Funding + 45W: The first ESB TCO funding scenario includes a voucher of $147,000 which is the Base School Bus Voucher Dollar Amount for New York State’s School Bus Incentive Program (NYSBIP). It also includes $40,000 from the 45W IRS tax credit, a provision of 2022’s Inflation Reduction Act, which can be applied to the upfront cost of any electric school bus. These incentives bring the lifetime cost down to $482,000. Additionally, in this scenario you see that net present value combined operation and maintenance costs (NPV O & M) is higher than the other ESB scenarios. This is because New York has higher electricity prices than the national average. The national average is used in all the other scenarios in the graph.
Electric School Bus (ESB) + CSBP Priority Rebate Scenario + 45W: The second ESB TCO funding scenario includes a grant of $250,000 that was available to non-priority districts in the first grant award cycle of EPA’s Clean School Bus Program. The 45W tax credit is also included, applying an additional $40,000 in funds. These incentives bring the lifetime cost down to $359,000.
ESB Stacked Funding Scenario: The last ESB TCO funding scenario includes $169,000 from State Volkswagen grant, $117,000 from U.S. Department of Agriculture’s Community Facilities program, $45,000 from electric utility cooperative funding, and $40,000 from the 45W tax credit and demonstrates how stacking funding opportunities can help districts overcome the upfront cost barrier of an ESB and, in this case, bring the TCO all the way down to $278,000. This scenario is inspired by the real-world solution implemented in Knox County, Missouri.
The TCO for electric school buses can actually be hundreds of thousands of dollars less than the TCO of a diesel-burning school bus given current funding options available. This saves districts money that they can reinvest in the classroom, all while eliminating harmful tailpipe emissions.
TCO Calculator and comparison tools
If you’re ready to start comparing options for your district, you can get started with the new Total Cost of Ownership Calculator for Electric School Buses tool developed by the ESB Initiative and Atlas Public Policy.
The TCO Calculator allows you to toggle between scenarios, select example options like Clean School Bus Program rebate funding, and see location- and charger-specific electricity costs.
For an even more detailed and customizable TCO calculation, we recommend you use Atlas Public Policy’s updated Fleet Procurement Analysis Tool, linked below. The ESB Initiative has prespecified this tool for Type A, Type C and Type D models. You can download the Excel tool that best fits your district’s needs below, along with the user guide to assist with your use of this tool:
The ESB Initiative has also developed a Technical Note as a reference guide for those conducting the TCO analysis of diesel and electric school buses. The Technical Note provides users with recommended default specifications for key calculation parameters. The recommendations, based upon publicly available information, can increase your confidence in the results of analysis undertaken to assess the economics of fleet electrification. Please note that the ESB Initiative recommends that users use more specific data to reflect local situations where such data is available. Get the Technical Note here.
Have questions about TCO for ESBs? Reach out to Alyssa Curran at alyssa.curran@wri.org
Disclaimer: These tools and models were developed by World Resources Institute’s Electric School Bus Initiative and Atlas Public Policy based on the experiences of school districts and publicly available information. These recommendations are intended to provide general guidance and should be used for informational purposes only. We do not expect credit or citation for any of this material. Any information in this article should be used at your own risk. WRI makes no warranties or representations about the completeness or accuracy of this information and assumes no responsibility for any consequences of your use of these materials. You should consult with your legal advisor regarding compliance with all applicable laws and regulations.