Volkswagen AG’s MAN commercial-vehicle division expects its electric city buses, on sale as of 2019, to cost about 2.5 times more than conventionally powered ones, with the difference easing only in the following few years.
MAN SE Chief Executive Officer Joachim Drees’s estimate for the models, giving a price tag of around 500,000 euros ($583,000) a bus, highlights the struggle for vehicle manufacturers, cities and infrastructure providers to manage spending amid pressure to adopt zero-emission models to reduce pollution. The company predicts that a battery-powered bus’s lifetime cost is likely by 2023 to roughly match figures for combustion-engine versions, Drees said Monday at a briefing in MAN’s hometown of Munich.
“The electric bus will be more expensive up front,” Drees said. “But batteries having a second life, and their rapidly falling prices, will help offset this,” along with savings on fuel and maintenance.
Compared to carmakers, commercial-vehicle manufacturers have been slow to push forward with electric models, because their models carry heavier loads and need large batteries that take up room and increase costs. The broader range of vehicle uses and comparatively smaller numbers sold also make switching to electric versions a tougher undertaking.
Still, a shift to the technology is accelerating as cities take steps to cut pollution and potential competitors emerge, including Tesla Inc. Daimler AG, the owner of the Mercedes-Benz and Freightliner brands, showed off a battery-powered heavy-duty model last month, weeks before electric-auto pioneer Tesla is scheduled to introduce its own truck.
“We’d like to have electric buses as quickly as possible, and as many as possible,” Munich deputy mayor Josef Schmid said at the event. For the southern German city, shifting to electric buses means replacing a fleet of 460 vehicles.
To help push along technology transformation and improve profitability, MAN is investing 400 million euros annually in the five years through 2020 at its commercial vehicle plants in three European Union countries as well as Russia, South Africa, India and Turkey. About 500 million will be spent on electric powering systems in that time, it said. The measures are part of a plan to increase margins across Volkswagen’s truck, bus and van business, including heavy-duty vehicle makers MAN and Scania, to challenge rivals Daimler and Volvo AB.
“By 2025, I don’t expect cities to buy buses anymore that aren’t battery powered,” Drees said.