Skip main navigation

Global Financing Model Examples

With two contrasting cases in different parts of the world, you will understand and learn about the financing and business models.
A yellow E-Bus being charged with pantograph charging in Östersund,Sweden.

This article presents two case studies on financing for E-Bus projects in Chile and Indonesia. One approach to mitigating risk between the bus operator and the asset owner is to separate asset ownership and assign responsibility to different stakeholders. In Santiago, Chile, a shared responsibility model has been formalized, which has enabled the successful introduction of nearly 800 E-Buses. In Indonesia, the government has offered subsidies in the form of tax breaks to incentivize the use of E-Buses.

The Financing Structure Adopted

Chile

Innovation in the Business Model

The business model relies on six private operators to cover the city’s needs. There has been a focus on improving vehicle technology by focusing on public transportation, which has paved the way for introducing E-Buses.

Innovative financing models have allowed E-Bus pilot projects to scale to more than 100 bus operations quickly. By 2023, there will be 1,900 E-Buses in regular operation, targeting to add as many as 2,600 by 2024 and achieve full electrification by 2035.

For example, Chile’s largest electricity utility developed Transantiago’s new E-Bus business model in conjunction with a public transport system. The city’s E-Buses have been purchased from different Chinese manufacturers by two electric companies and are leased to bus operators, partially paid for by user fares and partly covered by existing public transport subsidies.

A bus in a bus stop picking up passengers. Bus Stop in Santiago, Chile. BNamericas (2019)

Metbus

Santiago, Chile, boasts the largest fleet of E-Buses outside of China. Leading the charge in these deployments is Metbus, one of the city’s six private bus operators. In collaboration with the utility and asset manager Enel X, as well as the bus manufacturer BYD, Metbus has taken the reins on most of these initiatives.

In a span of just four years, Metbus accomplished the deployment of an impressive fleet of 436 E-Buses. This achievement was made possible through an innovative financial framework that disentangles bus ownership and operation. This strategy involves a close partnership with Enel X and BYD, supplemented by financial guarantees from local authorities.

The operational outcomes of the Metbus fleet are truly remarkable. With 15 million kilometers logged, the operational and maintenance costs for Metbus’s E-Buses are 70% and 37% lower, respectively, than their diesel counterparts of equivalent capacity.

Business Model Developed

A diagram showcasing the Business model integrated with the stakeholders.Click to expand. Business Model of the E-Buses. PEM Motion (2023)

If you want to learn more about this case study, including the roles played by each of the stakeholders, as well as the technical and financial details of the operation, please visit: Link.

Indonesia

In Indonesia, the E-Bus market has a promising future. The main drivers and activators of this industry are the increase in gasoline price, public subsidies in the form of tax breaks to encourage the use of E-Buses, and environmental regulations that are aimed at rigorously reducing air pollution. The development of lithium-ion batteries and software solutions to optimize bus performance is currently influencing the dynamics of this new sector as well.

Men with work uniforms stepping inside a bus. Workers boarding an E-Bus in Riau Province, Indonesia. AprilAsia (2021)

Transjakarta, the city’s ground transportation provider, operates 52 E-Buses, marking a milestone in the city’s effort to transition to zero-emission vehicles. The 12-meter-long E-Bus has a maximum capacity of 60 passengers. These E-Buses were built by the Chinese company BYD. By 2025, the capital is looking to have at least 100 E-Buses installed in the city.

The government has also established a goal of having 10,047 operational E-Buses by 2030, alongside setting targets for the expansion of charging infrastructure. Preceding this, the Jakarta Government committed to initiating an E-Bus pilot program that comprises 100 E-Bus fleets, to discontinue the procurement of conventional buses by 2025.

A bus coming into a bus central. E-Bus arriving to a station in Jakarta, Indonesia. The Jakarta Globe (2022)

TransJakarta has initiated the first phase of electrification, scheduled to take place between 2023 and 2025. If you would like to learn more about this initial phase of E-Bus deployment, please visit: [Link] (https://itdp-indonesia.org/publication/building-a-regulatory-and-financial-basis-for-transjakarta-first-phase-e-bus-deployment/) Here, you can find detailed information about financing schemes, business models, and the regulatory framework.

Additionally, you might find valuable insights in this whitepaper: Link. This document provides insights on E-Bus procurement and contracting guidelines that support the adoption of E-Buses in Jakarta’s public transport system, as well as in other Indonesian cities. It also draws lessons from international success stories that have transitioned from E-Bus pilot projects to fully scaled-up programs.

Conclusion

Thanks to its robust regulatory framework, Chile has been a crucial pioneer in the adoption of E-Buses in Latin America and globally.

The clear involvement of all stakeholders has given Chile a significant head start in establishing the second-largest E-Bus fleet in the world, after China. This new model provides an excellent opportunity to serve as a remarkable example for other countries.

Chile’s climate targets and strong national commitment to electromobility provide a solid foundation for significant expansion in public transport electrification.

In the case of Indonesia, the government is striving to incorporate this new technology by offering subsidies in the form of tax advantages. The aim is to incentivize E-Bus operators and promote environmental and public health, which, as seen previously, aligns with these new decisions and regulations.

Later, we will elaborate more on the disadvantages that obstruct the financing of E-Buses.

References

  • Galarza, S. (2021). Financing and Procurement Models for E-bus implementation: The Experience of Santiago de Chile. Retrieved from: Link
  • African Regional Workshop and Training on Cleaner Buses. (n.d.) Retrieved from: Link
  • Orbea, J. (2019) What did Santiago de Chile do to become a global leader in electromobility? Retrieved from:Link
  • SouthEast Asia Infrastructure. (2022) Mapping the Growth: Market expansion, EV potential, and innovations with a focus on E-Buses* Retrieved from: Link
  • ICCT. (2023) Guidelines for Electric Bus Procurement in Jakarta. Retrieved from: Link
  • ITDP Indonesia. (2023) Building a Regulatory and Financial Basis for Transjakarta First Phase E-bus Deployment. Retrieved from: Link
This article is from the free online

Exploring the World of Electric Buses: Advancing Zero-Emission Public Transport

Created by
FutureLearn - Learning For Life

Reach your personal and professional goals

Unlock access to hundreds of expert online courses and degrees from top universities and educators to gain accredited qualifications and professional CV-building certificates.

Join over 18 million learners to launch, switch or build upon your career, all at your own pace, across a wide range of topic areas.

Start Learning now