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Institute of Transportation Studies
ELECTRIFICATION OF
PUBLIC TRANSPORT
A Case Study of the Shenzhen Bus Group
MOBILITY AND TRANSPORT CONNECTIVITY SERIES
©2021 International Bank for Reconstruction and Development / The World Bank
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MOBILITY AND TRANSPORT CONNECTIVITY IS A SERIES PRODUCT BY THE TRANSPORT
GLOBAL PRACTICE OF THE WORLD BANK. THE WORKS IN THIS SERIES GATHER EVIDENCE
AND PROMOTE INNOVATION AND GOOD PRACTICE RELATING TO THE DEVELOPMENT
CHALLENGES ADDRESSED IN TRANSPORT OPERATIONS AND ANALYTICAL AND ADVISORY
SERVICES.
Table of Contents
Acknowledgments
Abbreviations
Excecutive Summary
Part I Policy and Enabling Environment
Chapter 1 The Ecosystem and Policy Environment
1.1 Context
1.2 The Electric Mobility Ecosystem
Chapter 2 Shenzhen Bus Group and Its Electrification
2.1 Shenzhen Bus Group
2.2 SBZG’s Bus Electrification Journey
Part I Key Lessons
Part II Business Model and Implementation
Chapter 3 The Business Model
3.1 Ownership and Financing
3.2 Allocation of Responsibilities within SZBG
3.3 New Business Model for Electric Taxis
Chapter 4 Acquiring and Managing an Electric Vehicle Fleet
4.1 Planning and Technology Selection
4.2 Acquiring the Vehicles
4.3 Operation Adjustment
4.4 Maintenance and Asset Management
4.5 Operating and Managing Electric Taxis
Chapter 5 Acquiring and Managing Charging Infrastructure
5.1 Acquiring Charging Infrastructure
5.2 Technical Specifications
5.3 Operating Charging Facilities
5.4 Taxi Charging Infrastructure
Part II Key Lessons
Part III Assessment of Costs and Benefits
Chapter 6 Total Cost of Ownership
6.1 Introduction
6.2 Bus TCO
6.3 Charging Infrastructure TCO
6.4 Discussion
Chapter 7 Environmental Impacts
7.1 Methods
7.2 Emission Results
7.3 Comparison of Results
Table of Contents i
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Chapter 8 Cost-Benefit Estimation
8.1 Introduction
8.2 CAPs and GHGs
8.3 Marginal Cost for Damage Estimation
8.4 Emissions and Benefits
8.5 Discussion
Part III Key Findings
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ii Table of Contents
Figures
Figure 1-1 Number of motorized vehicles in Shenzhen 2010–2018
Figure 1-2 Shenzhen transportation mode share in 2010 and 2016
Figure 1-3 Interaction of government and industry
Figure 2-1 Total income of SZBG in 2018 (million yuan)
Figure 2-2 Comparison between revenue and operating cost of SZBG 2013–18
Figure 2-3 SZBG’s bus routes
Figure 2-4 Public transport trips in Shenzhen
Figure 2-5 Passenger trips and number of buses before and after fully electrification
Figure 2-6 SZBG’s different categories of employees per electric bus as of 2019
Figure 2-7
Dominant bus model in SZBG, BYD K8
Figure 2-8 Locations of charging stations and maintenance workshops of SZBG
Figure 2-9 The Electrification journey shown in bus composition of SZBG fleet
Figure 2-10 SZBG charging stations, available years and operators
Figure 3-1 Bus–battery separation financial leasing model
Figure 3-2 Whole-vehicle lease financial leasing model
Figure 3-3 Collaboration model of PCET (based on PCET 2014)
Figure 4-1 Average electricity consumption of electric buses per 100 kilometers in 2019
Figure 4-2 SZBG procures electric vehicles in eight steps
Figure 4-3 K8 bus specifications
Figure 4-4 The philosophy of charging arrangement to minimize the electricity costs
Figure 4-5 Charging terminal with one plug (left) and charging terminal with four plugs (right)
Figure 4-6 Charging guidance card on board of Line 38
Figure 4-7
Display of the bus operation and dispatching platform in the ITC
Figure 4-8
Display of Safety Management System of the ITC
Figure 4-9 Number of defects of conventional and electric buses per 1,000 vehicle kilometers running
Figure 4-10 Cost comparison of maintenance and repair between SZBG’s diesel and electric buses
Figure 4-11
Digital display of depot and vehicle information in the ITC
Figure 5-1 SZBG charging terminals by power output
Figure 6-1 Value of the composition of the bus costs in 2019
Figure 6-2 TCO results by year
Figure 6-3 Variables that affect the diesel bus TCO per kilometer
Figure 6-4 Variables that affect BEBs TCO per kilometer with subsidy
Figure 6-5 Total cost distribution
Figure 6-6 Unit cost distribution
Figure 6-7 Liuyue charging station operated by Winline
Figure 6-8 Value of charging station cost components in 2019
Figure 6-9 Yearly and cumulative costs and revenues for each bus charging
Figure 7-1 Description of comparative life cycle assessment in this study
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Figures iii
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Figure 7-2 Average emissions rates across 2018 PEV models in China 103
Figure 7-3 Energy source for electricity generation by China Southern Grid (2018) 108
Figure 7-4 Relationship between share of coal and benefits of bus electrification 115
Figure 8-1 Annual average air quality in Shenzhen during 2014–19 119
Figure 8-2 Shadow price of carbon in USD per 1 metric ton of CO2 equivalent (constant prices) 120
Figure 8-3 Bus operation pollution damage from DB and BEB 123
Figure 8-4 Economic benefits from BEB avoided CAPs and GHGs in 8 years 123
Figure 8-5 TCO and environmental cost of DB and BEB 124
Tables
Table 1-1 National and local purchase subsidy for electric buses (thousand yuan)
Table 1-2 Stakeholder in Shenzhen bus electrification
Table 2-1 Operational data of the three transit bus companies in Shenzhen (2018)
Table 2-2 Per route bus statistics of the three transit bus operating companies in Shenzhen (2019)
Table 2-3 Different type of bus lines of SZBG
Table 2-4 Electric bus models of SZBG fleet
Table 2-5 Timeline of Shenzhen bus electrification
Table 3-1 Operating cost comparison of electric taxis and gasoline taxis (yuan/1,000km)
Table 4-1 Pros and cons of two electric bus types
Table 4-2 Key performance parameters compared
Table 4-3 SZBG bus procurement results in 2015
Table 4-4 SZBG bus procurement results in 2016
Table 4-5 SZBG bus procurement results in 2017
Table 4-6 Specification of bus model in SZBG
Table 4-7 BYD e6 key specifications
Table 4-8 Maintenance and repair staffing transformation plan after the electrification
Table 6-1 Basic setting of BEB and DB
Table 6-2 BEB and diesel bus model configurations
Table 6-3 Bus purchase price and subsidies
Table 6-4 Electricity Price Scheme
Table 6-5 Weighted average price of electricity and diesel
Table 6-6 Diesel and electricity consumption efficiency
Table 6-7 Maintenance cost for diesel buses and BEBs
Table 6-8 Variables and range adopted in TCO literature
Table 6-9 Present value of diesel bus and battery electric bus
Table 6-10 TCO results compared with results from literature
Table 6-11 Monte Carlo distribution settings for diesel bus and BEB
Table 6-12 Cost structure of a charging station construction
iv Figures and Tables
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Table 7-1 Studies on EV battery production GHG emission
Table 7-2 Emissions from the production of diesel used in transportation
Table 7-3 Emission factors from electricity generation (g/kWh), 2018
Table 7-4 Emission of an electric bus from electricity consumption (g/100km)
Table 7-5 GHG emission of an electric bus (g/100 km)
Table 7-6 GHG emission from diesel production for one diesel bus per 100 kilometers
Table 7-7 Emission of a diesel bus when in operation
Table 7-8 GHG emission of one diesel bus (g/100km)
Table 7-9 GHG emission per 100 kilometers of one diesel and one electric bus (gCO2eq)
Table 7-10 Comparison of emission of 100 kilometers for one diesel and one electric bus (g)
Table 7-11 Pollutant emission reduction of bus electrification
Table 7-12 Share of energy use in power grid in different regions in China (2018)
Table 7-13 Benefits of electric bus in different regions in China
Table 8-1 CAP cost from EU 28
Table 8-2 Shadow price of carbon (USD/tCO2eq)
Table 8-3 Estimated economic benefits from air pollutant emissions reduction for the bus fleet
Table 8-4 Estimated economic benefits from the reduction of GHG emissions from the bus fleet
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Tables v
vi Acknowledgements
Acknowledgments
This report is an output of the Transport
Global Practice of the World Bank Group, with
close collaboration with the Shenzhen Bus
Group, the University of California Davis, and
the China Development Institute. The authors
are thankful to Binyam Reja, Transport Global
Practice Manager for China and Mongolia, for
his initiation of the effort and guidance in
preparing this report.
Authors of the report include:
World Bank
Yang Chen
Weimin Zhou
Annika Berlin
Huijing Deng
Danhui Tian
Jin Wang
Shenzhen Bus Group
Joseph Ching Yuen Ma
Hallie Mingyu Liao
Bonnie Xuemei Guo
Sophie Xuan Xu
Chris Yudong Liang
University of California, Davis
Xiuli Zhang
Alan Jenn
Yunshi Wang
China Development Institute
Yu Liu
Jingyun Li
Fulei Wei
Qian Wang
Yong Bian
Chunmei Li
The report benefited from valuable expert
advice received from the following peer
reviewers:
Alejandro Hoyos Guerrero (World Bank)
Bianca Bianchi Alves (World Bank)
Christophe de Gouvello (World Bank)
Gerald Ollivier (World Bank)
Georges Darido (World Bank)
Dominic Patella (World Bank)
Franck Taillandier (World Bank)
Muneeza Alam (World Bank)
Lulu Xue (World Resource Institute)
Peng He (World Economic Forum)
Alissa Kendall (UC Davis)
The authors thank the support extended to
this case study by:
Foreign Affairs Office of Shenzhen Municipal
People’s Government
Transport Bureau of Shenzhen Municipality
The authors wish to acknowledge the excel-
lent visual design of the report by Guomeng Ni
and the editorial support of Chitra Arcot and
Chunyu Lin.
The authors are also grateful for the opera-
tional and administrative support received
from Azeb Afework and Yumeng Zhu.
This report is supported and disseminated
under the umbrella of TransFORM, the
Transportation Transformation and Innovation
Knowledge Platform, a flagship knowledge
dissemination platform to share innovative
solutions in transport between China and
other World Bank client countries. This report
is also published as part of the recently
launched Mobility & Transport Connectivity
Technical Series of the World Bank Transport
Global Practice.
Abbreviations vii
Abbreviations
Abbreviation Full Name
AC
BEB
BEV
BYD
CAN
CAP
CATARC
DB
DC
EAP
EBC
EEA
EU
EV
FCV
GHG
HEV
ICEV
IPCC
ITC
ITS
LPG
MIIT
MOF
MOST
NDRC
NEV
NJGD
OEM
PGC
PHEV
SZBG
SMTC
SDRC
SNEVLG
SOC
SOE
STC
SWT
TCO
UITP
WZL
WBC
Alternating Current
Battery Electric Bus
Battery Electric Vehicle
Build Your Dream Company Limited
Control Area Network
Criteria Air Pollution
China Automotive Technology and Research Center Company
Diesel Bus
Direct Current
Employee Assistance Program
Eastern Bus Company
European Environment Agency
European Union
Electric Vehicle
Fuel-cell Vehicle
Greenhouse Gas
Hybrid Electric Vehicle
Internal Combustion Engine Vehicle
The Intergovernmental Panel on Climate Change
Intelligent Transportation Center
Intelligent Traffic System
Liquefied Petroleum Gas
Ministry of Industry and Information Technology
Ministry of Finance
Ministry of Science and Technology
National Development and Reform Commission
New Energy Vehicle
Nanjing Golden Dragon Bus Company Limited
Original Equipment Manufacturer
Potevio Group Corporation
Plug-in Hybrid Electric Vehicle
Shenzhen Bus Group
Shenzhen Municipal Transport Commission
Shenzhen Development and Reform Commission
Shenzhen Energy Saving and New Energy Vehicles Demonstration and Promotion Leading Group
State of Charge
State-Owned Enterprise
Shenzhen Transportation Commission
Shenzhen Winline Technology
Total Cost of Ownership
Union Internationale des Transports Publics
Wuzhoulong Company Limited
Western Bus Company
Executive Summary
China is the only economy worldwide that has
implemented large-scale electrification of city
buses, accounting for 98 percent of the global
electric bus stock and 95 percent of the global
stock of dedicated bus chargers (IEA 2020).
This rapid technology transition was driven by
strong policies supporting local governments
with experimental innovations and lessons
from pilot projects that were scaled across the
country. As early adopters with the operational
experience of a whole lifecycle of electric
buses, Chinese cities can offer valuable
knowledge and lessons to the rest of the world
in the technology, policy, infrastructure, and
capacity requirements for making the electrifi-
cation transition. This case study on the
electrification of buses and taxis is part of a
larger effort by the World Bank Transport
Global Practice to share China’s experience in
rolling out electric mobility to the international
community so that other governments can
make more informed decisions, avoid potential
risks, save resources, and connect to experts
in the field and build capacity.
The City of Shenzhen has China’s, and the
world’s, first and largest fully electric bus and
taxi fleets. Shenzhen began adopting electric
buses in 2009, under a national electric vehicle
demonstration program that challenged ten
cities across China to deploy at least 1,000
electric vehicles (EVs) for three years. In 2017,
Shenzhen became the first city in the world
that fully electrified its urban transit fleet of
16,359 electric buses. In addition, Shenzhen is
also approaching the goal of fully electrifying
its taxi fleet of 21,609 taxis—99 percent
electrified at the end of 2019 with 21,485
electric taxis. Private cars, garbage trucks, and
other heavy-duty vehicles are transitioning
toward electrification as well.
The Shenzhen Bus Group Company Ltd.
(SZBG), one of the three major bus operators
in Shenzhen, was the first public transport
operator in China and the world to electrify its
entire fleet. SZBG operates nearly 6000
electric buses running one third of the city’s
bus routes, carrying 40 percent of bus passen-
ger trips of Shenzhen. The SZBG electrified its
whole bus fleet from 2009 to 2017 in three
phases: a demonstration stage in 2009–2011,
followed by small pilots from 2012–2015, and
large-scale electrification from 2016–2017.
This was certainly not a transition without its
challenges: how the SZBG dealt with them and
Executive Summary 1
Collaborating
Closely with Public
and Private
Stakeholders
The transition to electrification requires
coordination and policy synergy across
different levels of governments as well as
different departments within the governments.
Private players especially in vehicle manufac-
turing, charging, and new technology are also
critical. The ultimate users of the service are
passengers, who should not be neglected.
Shenzhen’s success in electrifying its entire
bus fleet in a short period of time was a joint
effort by private and public entities.
Shenzhen has established the Shenzhen
Energy Conservation and New Energy Vehicle
Demonstration and Promotion Leading Group
(SNEVLG) to trickle down national and
provincial policies and to coordinate relevant
municipal departments. The government
mandate to shift completely to clean energy
buses—accompanied by generous national
and local government subsidies that signifi-
cantly lowered the upfront cost—supported the
fast and full electrification of the bus fleet in
Shenzhen. The combination of purchase
subsidies from national and local governments
together contributed more than 60 percent of
the total procurement cost of the electric buses
from 2015 to 2017, which was critical for its
large-scale adoption. The municipal govern-
ment of Shenzhen also made significant efforts
to resolve the land availability issue for
constructing new charging stations.
The main private stakeholder was the bus
manufacturer. The manufacturer provided
warranties that cover the lifetime of a bus in
Shenzhen, its maintenance support as well as
training for operator staff. Such warranties not
only relieved the operator’s concern over
technology uncertainty and reduced the
2 Executive Summary
what the financial and environmental impacts
are, could provide important lessons for public
transport operators around the world embark-
ing on a similar path.
The authors would like to note that Shenzhen
is a unique case for electrification, even in
China. Shenzhen has a mild and warm climate
and relatively flat topography, where electric
vehicles tend to perform in a more reliable way
than in cold or hilly areas. More importantly,
Shenzhen is one of the most affluent cities in
China—a young megapolis rising after China’s
economic reform and opening up, with overall
high-quality infrastructure—street network,
power grid, utilities—and an almost complete
supply chain locally from battery production
and vehicle manufacturing to battery recycling
companies and research and development
institutions, most notably housing the head-
quarters of the automobile manufacturing giant
Build Your Dream Company Limited (BYD).
Furthermore, Shenzhen municipal government
is financially and institutionally capable—while
it can afford very generous fiscal subsidies, the
government has been famous for its policy
innovation and ambition, given Shenzhen’s
Special Economic Zone status. Despite its
unique advantages that most other cities might
not have, this case study on the electrification
of buses and taxis of the SZBG still provides
other cities and bus operating companies with
a series of useful lessons, especially on the
practical implementation details as well as a
valuable accounting of the financial and
environmental impacts of the electrification
using real-life data.
Executive Summary 3
maintenance cost but also incentivized
manufacturers to keep innovating and improv-
ing their electric bus performance. Another
important private stakeholder is the charging
service provider who functions as a conduit
between the grid company and bus operators
by evaluating grid capacity and providing
additional transformer and power lines as
necessary.
Besides government and industry partners, the
SZBG also worked closely with private compa-
nies and nonprofit organizations including
Huawei, Didi Chuxing and the International
Association of Public Transport (UITP) running
pilot programs on intelligent dispatch systems,
on-demand bus services, and autonomous
driving technologies. Furthermore, the SZBG
conducted passenger satisfaction surveys
every year to evaluate its service and to make
adjustments—passengers expressed very high
satisfaction with the electric bus service, and
the SZBG was able to maintain a stable
ridership against the overall declining bus
demand with the expanding metro system.
Selecting
Technology to Fit
Operational Needs
and Constraints
At the early stages of electrification,
2009–2013, EV technologies were not widely
tested, and technical specifications of vehicles
varied among manufacturers. At the same
time, bus operators also lacked the technical
knowledge to evaluate specifications. The
SZBG has gained a critical understanding of
the technology from a small-scale pilot and
learned to specify the vehicle and charging
needs that fit their own operation requirements
and constraints. The SZBG has established a
technology department, whose major mandate
is to facilitate technology selection and
adoption. The technology department studies
the available technologies on the market and
coordinates the needs from relevant depart-
ments inside the SZBG including operation
and fleet management, maintenance and
repair, financial, procurement, information
technology, human resources, and strategic
investment.
Aiming for large-scale adoption in a very short
time, the SZBG decided to choose a vehicle
model that would require minimal changes to
the existing bus routes and schedules. Unlike
other cities that tested different electric bus
technologies, Shenzhen remained dedicated
to a single, proven vehicle technology—elec-
tric buses with a large battery—to achieve the
daily mileage of its required operation. Shen-
zhen’s electric buses are dominated by the
BYD K8 bus—67 percent of the fleet—that is
10.5 meters long with a theoretical 250-kilome-
ter battery range, featured by two-hour direct
current (DC) fast charging or 4- to 5-hour
alternating current (AC) slow charging. With an
average daily operation distance of 190
kilometers, these buses could run a whole day,
and would only need recharging at night for
most routes. Over the ten-year period, the
SZBG and the manufacturers worked together
to improve the technology and optimize the
vehicle configurations based on operation
feedbacks, and created a more mature and
standardized product.
In selecting of charge technology, the SZBG
decided to use DC fast charging stations to
overcome two of the most prominent issues of
charging speed and the lack of space at
depots—DC fast charging allows multiple
buses to be charged at the same charging
terminal without moving them. The SZBG also
considered several alternative charging modes
such battery swapping and wireless charging
but did not choose those due to various
reasons including technical constraints,
financial viability, charging efficiency, and
impact on the grid.
4 Executive Summary
Finding Viable
Business Model to
Improve Financial
Efficiency
The key challenge for electric bus adoption
around the world is its high capital cost, even
though the price of the electric bus has
dropped significantly since the SZBG started
its electrification process. Even with sizable
national and local government subsidies, the
purchase cost of electric buses is still much
higher than conventional buses. The need for
charging facilities also increases the costs,
and the land acquisition or rent for charging
stations adds to the initial investment needs.
The SZBG introduced a financial leasing
model that used a financial leasing company
that purchases and owns the vehicles and
leases them to the SZBG for a period of eight
years, with a lifecycle warranty for key parts
offered by bus manufacturers. The SZBG
takes ownership of the vehicles after the
leasing period is over. The batteries are
returned to the manufacturer to recycle and
dispose, while the bus body is sent for scrap-
page and metal recycling. Since the leasing
period equals the total life of the buses, this
arrangement turned the high-cost procurement
into more manageable annual rental or lease
payments. The charging facilities including
charging stations and transformers are owned
by the owners of depots, who can be the
SZBG or a charging service provider, while the
government owns the power supply lines. This
arrangement turned out to be a common
model followed in China, and has nurtured a
healthy and competitive market for charging
service providers including the participation of
grid companies. Based on this whole-vehicle
lease financing, the SZBG established a viable
model where players with different specializa-
tions are responsible for the businesses of
their own expertise while bearing the risks that
they are in the best position to manage. The
charging service provider and the SZBG fleet
operators can then focus on the operation and
management of the charging facilities and the
bus fleet respectively.
Upgrading the
Digital Systems and
Training Staff for
Better Operation
and Management
By considering both operational needs and
electricity prices, the SZBG fits the charging
arrangements into its operational plan. The
SZBG conducts performance and efficiency
checks of each route in every six months and
makes appropriate refinements depending on
the running distance, shifts, and charging time.
Charging facilities and shifts for charging were
also carefully designed to accommodate the
large charging demands at night. For example,
using the charging terminals with four plugs
allowed four buses to be charges simultane-
ously—reducing the need to move electric
buses at nighttime.
Electrification works concurrently with informa-
tion and technology as a lot of real-time data
from the vehicles and charging facilities can be
collected and managed. With the electrifica-
tion, the SZBG upgraded its bus dispatch and
management system to support efficient and
safe operations of electric bus fleets. Three
systems were integrated to form SZBG’s
Intelligent Transportation Center (ITC): bus
operation management system, safety
management system, and repair and charging
management system. The integration of
charging terminal information and bus
management system reduces drivers’ range
anxiety, improves operation efficiency and
safety, and offers potential for more efficient
asset management and better services to
passengers.
On the other hand, comprehensive and
well-planned training for all staff in the SZBG
was crucial in making the electrification
transition a smooth process without laying off a
single employee. Operational differences
mandate training for existing bus drivers to be
eligible to drive electric buses including
requirements to pass a driving test and a
knowledge test. For maintenance staff, a
step-by-step staff transformation plan—train-
ing, re-assignment, incentives, talent attribu-
tion, and compensation—was devised for each
team in each maintenance and repair work-
shop, mindful of the differences with the new
system based on specialty, age, and experi-
ence.
Overcoming
Obstacles in
Building the
Charging
Infrastructure
The prerequisite of charging infrastructure is
one of the main operational differences
between diesel and electric buses, and the
network of charging stations had to be built
over time. The rapid rollout of electric buses
from 2016 to 2018 required a large amount of
land for charging stations, which was challeng-
ing for a large and densely populated city like
Shenzhen. Furthermore, charging buses
escalated local electricity demand, sometimes
requiring transformers and additional power
lines to be added to increase zonal grid
capacity. The lack of space for building
charging infrastructure has been a bottleneck
for electrification.
On one hand, by leasing charging facilities and
purchasing charging services, the SZBG
transferred the land acquisition risks, including
ownership rights, resettlements, land use
changes, and land lease disputes to the
charging service providers. On the other hand,
the Shenzhen Municipal Government has
relaxed land use regulations and provided
incentives to find available land for charging
stations. By 2020, the SZBG has 1707
charging terminals at 104 locations (including
its own depots, bus terminals, as well as public
parking lots, parks), reaching a ratio of 1:3.5 of
charging terminal to the electric bus. Nine
charging service providers constructed and
managed these charging facilities. The
majority of the charging terminals are
equipped with 150-kilowatt (50 percent) and
180-kilowatt (19 percent) DC fast chargers
with different configurations based on the
charging arrangement. The number of
charging terminals, charging plugs, and power
of the charging terminals were decided based
on the land availability at the location of the
charging station, number of buses to be
served, space requirements, speed of
charging terminals, grid capability, and other
factors. Realizing the scarcity of charging
facilities and space for new charging facilities
as the main obstacle, the SZBG decided to
remain with DC fast charging—as opposed to
AC slow charging, battery swapping, or
wireless charging—to ensure operational
efficiency. The SZBG also explored and
encouraged innovations in network charging
and flexible charging cabinet to overcome the
charging bottleneck.
Executive Summary 5
6 Executive Summary
Financially Viable
Only with Subsidies
and Significant
Environmental
Benefits
With government subsidies and the manufac-
turers’ lifetime warranty, the total cost of
ownership (TCO) of electric buses is 35
percent lower than the diesel fleet for the
SZBG. However, if the subsidies are excluded,
the TCO of battery electric buses (BEB) is 21
percent higher than diesel buses (DB). The
electrification of public transport significantly
reduced greenhouse gas (GHG) emissions
and air pollution in Shenzhen. The lifecycle
GHG emission of an electric bus is only about
52 percent of the emission from similar sized
diesel buses in Shenzhen. Electrifying one
10.5-meter bus saves 274 tons of carbon
dioxide in its 8-year lifetime. The electrification
of the SZBG buses saves 194,000 tons of
carbon dioxide annually. The electrification
also contributes to a significant emission
reduction of air pollutants including CO, NOX,
PM2.5 and PM10. Subsidizing electric buses
provides strong economic benefits while
making technology financially viable for the
bus operator, taking the results from the
estimation of environmental benefits and TCO.
Higher subsidies than economic benefits are
justified at the beginning with electric buses
being a new technology, but subsidies should
be downscaled and phased out gradually once
the technology gets to scale. If the other
benefits from bus electrification such as noise
reduction, passenger and driver comfortability
improvement, grid stability improvement and
easier data collection to improve bus operation
are included, the economic case for BEBs
would only grow stronger.
Passenger satisfaction significantly increased
because of the transition to electric buses.
According to a regular satisfaction survey, bus
users rated comfortability, safety, and afford-
ability much higher due to smoother rides with
an electric engine. Electric buses also run
quieter than diesel buses, and the smell of
diesel exhaust at bus stations has disap-
peared. Additionally, the bus fare has been
maintained at the same low level for passen-
gers, leading to overall positive user feedback.
The transition to a new fleet helped improve
public transport services. The SZBG fully
explored new mobility solutions to provide
customized public transport services to the
public that demonstrated synergies between
electric and smart mobility. The SZBG
co-founded Didi Youdian Technology Company
in 2016 to cover on-demand services that
complemented traditional fixed-route bus
operations. They also invested in a mobile
application to integrate more urban mobility
services in the creation of a mobility-as-a-ser-
vice (MaaS) platform.
The SZBG leveraged government’s support for
electrification to reform and revive the strug-
gling taxi sector, taking advantage of govern-
ment subsidies and lower operating costs of
electric taxis due to its much lower energy cost
and the waived license fee. SZBG’s taxi
subsidiary companies were 100 percent
electrified by the end of 2018 with a total of
4,681 electric taxis, following a viable business
model where all stakeholders collaborated to
benefit. The cost of operating electric taxis is
almost 30 percent lower than the cost of
operating gasoline taxis. However, charging
time is a big hindrance and takes about three
hours per day of operation, considering travel
time, wait time, and charging time. The SZBG
explored innovative measures to enhance
efficiency and generate revenue such as
developing a one-stop service complex, small
parcel delivery, school taxi, traffic police
support, advertising and marketing campaign,
and driving data collection. By the end of 2018,
11,571 charging terminals were available to
electric taxi charging in Shenzhen, and the
network continues to expand with the growing
Part I: The Policy and Enabling Environment
of Electrification of Buses in Shenzhen
Part II: The Business Model and Implementa-
tion of SZBG’s Transition to Electric Mobility
Part III: Assessing the Costs and Benefits of
SZBG’s Transition to Electric Mobility
A Separate Brochure: Key Steps of Bus Fleet
Electrification for Cities
References
1
International Energy Agency. 2020. Global Electric
Vehicle Outlook, IEA, Paris. https://www.iea.org/reports/-
global-ev-outlook-2020
Executive Summary 7
demand of electric private cars.
In This Report
Electrification of public transport provides an
opportunity to achieve multiple objectives:
low-carbon urban development, reduction of
local air pollution, creation of jobs, and higher
acceptance of public transport by residents.
However, owing to higher capital costs versus
diesel or gas alternatives, the rapid evolution
of product technologies, limited operational
experience, and lack of trained personnel, the
adoption of electric buses has been slow
worldwide.
Electric buses require different operational and
financing schemes due to their higher fleet
costs, the need for charging infrastructure, and
additional land requirements to park and
charge the buses. To be successful, electric
urban buses must be approached as a
coherent system that embraces the vehicle,
the infrastructure, the operation, the users, and
the financial sustainability. Finally, their
introduction involves a new set of stakehold-
ers, such as electric utilities and battery
manufacturer companies and stronger collabo-
ration with local government agencies that
usually have higher stakes in these projects
because of the provision of subsidies.
Although many of the operational lessons are
transferable to other cities in emerging econo-
mies, the successful transition not only
depends on technology but also political will.
Probably the most important first step in the
transition of electric mobility is providing a
vision with stronger targets. The Shenzhen
case study provides references and recom-
mendations to cities for the deployment of
electric buses based on the comprehensive
analysis of the journey of the SZBG.
The case study is organized into four main
parts:
1
Policy and
Enabling Environment
Chapter 1
The Eco-System and
Policy Environment
1.1 Context
The transport sector is facing a major transfor-
mation. Technological advancements play an
important role in decarbonizing the transport
sector as part of global climate change
mitigation efforts. The International Energy
Agency (IEA) estimates that electrification of
the global vehicle fleet of public transport
buses will comprise about 30 percent of
projected emission reductions in transport by
2050 (IEA 2017). The electrification of public
transport provides an opportunity to achieve
low-carbon development and the reduction of
local air pollution, if the transition is well
designed and coordinated among a wide
range of stakeholders. However, owing to
higher capital cost versus gasoline or diesel
alternatives, rapid evolution of product technol-
ogy, limited operational experience, and lack of
trained personnel, the adoption of electric
buses has been slow worldwide.
In China, the transport sector was the fastest
growing sector for carbon dioxide emissions,
reaching 986 million tons of carbon dioxide
equivalent from fossil fuels in 2019 (EU 2020).
China has placed great emphasis on the
promotion of electric mobility since 2009,
motivating to reduce local and global emis-
sions, strengthen the local automotive industry,
and reduce oil dependency. In the public
transport sector, with strong promotion from all
levels of governments, China's urban transit
bus fleet by the end of 2019 consisted of more
than 324,000 electric buses, which indicates
an increase from 0.33 percent in 2013 to 46.8
percent in 2019 (MOT 2020). China is the only
economy worldwide which has large-scale
implementation of electric buses, and is one of
the early adopters to have had the operational
experience of a whole lifecycle. These lifecycle
experiences and lessons learned from electric
mobility programs are extremely valuable to
the rest of world to understand the technology,
policies, infrastructure, and operational design
and meet the requirements of successful
adoption and transition.
One of the earliest adopters of electric mobility
was the city of Shenzhen. Shenzhen’s electrifi-
cation experience offers a rare opportunity in
understanding the challenges of enacting wide
scale, system level changes from a small
The Eco-System and Policy Environment 9
electric bus pilot to the whole public transport
mobility system. Shenzhen became the first
city in the world in 2017 that fully electrified its
urban transit fleet of 16,359 electric buses.1 In
addition, Shenzhen is approaching the goal of
fully electrifying its taxi fleet of 21,609
taxis—99 percent electrified at the end of 2019
with 21,485 electric taxis.
Located in China’s south-eastern province of
Guangdong, adjacent to Hong Kong SAR,
China, Shenzhen was designated an econom-
ic special district of China in 1978. Shenzhen
has a subtropical climate with average
temperature of 23ºC and annual precipitation of
1935.8 millimeters. The city has a population
of 13.43 million (end of 2019) and an area of
1,991 square kilometers.2 With a gross
domestic product (GDP) of 2.42 trillion yuan
(approximately USD 356 billion) in 2018,3
Shenzhen is one of the most developed cities
in China—ranked third in the Chinese Cities
Economic Ranking 2018.
Shenzhen is a vibrant young city with rapid
motorization. Shenzhen started to implement
the purchase restriction policy on cars in 2014.
The policy limits fewer than 100,000 vehicles
being allowed to register each year, with
license plates allocated by a combination of
lottery and auction. As a result, the number of
private cars has been increasing at a much
slower pace after 2014. As estimated, Shen-
zhen had 3.37 million automobiles4 (figure 1-1)
by 2018. Nevertheless, share of daily trips by
Shenzhen residents using nonmotorized
transport continued shrinking, dropping from
57 percent in 2010 to 52 percent in 2016
(figure 1-2). Public transit buses and subway
systems are important transportation modes.
Shenzhen’s first metro line started operation in
2004 and expanded rapidly since then, with
eight lines of 289.5 kilometers long. The mode
share by metro rose from one percent in 2010
to seven percent in 2016, and rose further
afterward lifting more public transport shares.
Figure 1-1 Number of Motorized Vehicles in Shenzhen 2010–2018
10 The Eco-System and Policy Environment
0.0
1.0
2.0
3.0
4.0
Number of Automobiles (million)
Growth Rate (%)
0%
5%
10%
15%
20%
25%
2010
2011
2012
2013
2014
2015
2016
2017
2018
Figure 1-2 Shenzhen Transportation Mode Share in 2010 and 2016
1.2 The Electric Mobility EcoSystem
Shenzhen’s success in electrifying its entire bus fleet in record time was a joint effort by private and
public entities. Stakeholder analyses recognize the complexity and importance of coordination
between different entities in the transition to electric mobility, and the relationship between them. The
roles and interactions of public and private players in the ecosystem are shown in figure 1-3.
Figure 1-3 Interaction of Government and Industry
The Eco-System and Policy Environment 11
2010
2018
Walk, 51%
Walk, 47%
Bike, 6%
Bike, 5%
Transit Bus, 15%
Transit Bus, 12%
Metro, 7%
Metro, 1%
Taxi, 2%
Taxi, 1%
Private Car, 22%
Private Car, 19%
Commute Bus, 4%
Commute Bus, 3%
Motocycle, 2%
Motocycle, 2%
National Gov Shenzhen NEV Leading Group
BEB Manufacturer
Charging Service
Provider
Bus Operating
Company
MIIT NDRC
MOFMOST
SDRC
SFB District Office
STC
SEB
SUPLRC
Operating
Subsidy
Long-Term
Customer
Subsidy Consolidate Land
Use and Electricity
Subsidy Subsidy
Lifetime
Warranty
Product Test
and Feedback
Bus Charging
Service
1.2.1 Role of the
Government
At National Level
With the motivation of reducing imported oil
dependency, strengthening national automo-
tive industries, and improving air quality, the
national government initiated the national new
energy vehicle (NEV) promotion strategy. The
Ministry of Industry and Information (MIIT),
National Development and Reform Commis-
sion (NDRC), Ministry of Science and Tech-
nology (MOST), and Ministry of Finance
(MOF), known as the “four ministries”, led the
promotion and development of the NEV
industry and prioritized the electrification of
buses. Other ministries, such as the Ministry
of Transport (MOT)—responsible for the
rollout of new energy buses and taxis—play
supporting roles.
Among the four ministries, MIIT plays the
leading role as it formulates the industrial
development plan and coordinates the NEV
development, administrative, and supporting
departments. MIIT also maintains a catalog of
NEV models that are qualified for governmen-
tal subsidy. The Communication and Clearing
Center under MIIT collects data of NEV sales
and subsidy amount, verifies them, and
evaluates the required annual operating
mileage. MIIT is also responsible for organiz-
ing multiministry meetings to discuss the
policy and coordination mechanism among
different ministries.
For example, MIIT organized a crossministry
meeting on May 14, 2019 to discuss the roles
and task assignments among different
ministries to enhance the safe operation of
NEV. Ministries that attended the meeting
included NDRC, MOT, Ministry of Finance,
Ministry of Public Security, Ministry of Ecologi-
cal Environment, Ministry of House and Urban
Development, Ministry of Transport, Ministry
of Commerce, Ministry of Emergency
Response, and Commission of National
Assets. This level of coordinated meetings
was held regularly or ad hoc to discuss
emerging issues, potential policies and the
allocation of responsibilities among ministries.
In each ministry, one office acted as a focal
point of NEV. This mechanism discussed and
coordinated policies regarding every aspect of
NEV.
The four ministries established a program
called “Ten cities one thousand NEVs” in 2009
that challenged ten cities across China to
deploy at least 1,000 electric vehicles in each
city each year for three years. Shenzhen was
among the first batch of demonstration cities
under this national electric vehicle demonstra-
tion program that began its electrification
journey.
National policies and guidance are then
passed on to provincial and municipality levels
through series of directives.
At Provincial and Local Level
Guangdong Province, where Shenzhen is
located, established a coordinated meeting
mechanism for different provincial-level
12 The Eco-System and Policy Environment
Note: National and local governments provide purchase subsidies to the electric bus manufacturer. The Shenzhen local
government also provided subsidy for bus operating companies and charging station companies. In this way, the government
departments relived the financial burden for all its industry partners on the business chain. Lifetime warranty and battery change
offered by the BEB manufacturer in accordance to negotiation and contracts helped ease the bus operating companies on the
uncertainty of technology. Feedback and recommendations on the BEB product design also promote the product evolvement for
the manufacturer. The charging companies take care of the construction and operation of the bus charging stations, which also
facilitate the bus operating company’s smooth transition from traditional buses to electric buses.
1
departments to discuss policies at the provin-
cial level. These meetings also serve as a
mechanism to pass national level policies and
directions to the municipality level.
The primary motivation behind the Chinese
local government’s support of NEV deploy-
ment is to promote local tax-paying industries
and improve local air quality. Three munici-
pal-level agencies are playing critical role in
the process.
Shenzhen NEV Leading Group: The munici-
pal government established the Shenzhen
Energy Conservation and New Energy Vehicle
Demonstration and Promotion Leading Group
(SNEVLG) in December 2009 in response to
emerging opportunities of electric mobility.
The main municipal government departments
involved are the Shenzhen Development and
Reform Commission (SDRC), Shenzhen
Transportation Commission (STC), Shenzhen
Finance Bureau (SFB) and the Shenzhen
Urban Planning, Land and Resources Com-
mission (SUPLRC). Hosted at the Shenzhen
Development and Reform Commission
(SDRC), SNEVLG comprises the mayor’s
office, the SDRC, STC, SFB, SUPLRC and
district offices. SNEVLG works as the platform
for communicating and facilitating cooperation
among the municipal departments in promot-
ing NEV development.
Shenzhen Development and Reform
Commission: The SDRC takes the leading
role in the NEV development of Shenzhen.
The SDRC developed regulations and
oversees the process of the NEV purchase
subsidy program. It also sets subsidy applica-
tion requirements, reviews and approves
these applications. Moreover, the SDRC also
interprets national and local regulations,
issues guidance principles, and provides local
incentives and subsidies to EV manufacturers,
vehicle dealers, vehicle operators, and
charging operators.
Shenzhen Transportation Commission:
The STC is the supervisory authority of the
transport sector of Shenzhen. The STC
supervises and approves the routes and bus
stops, reviewing and updating them twice a
year. It also bears the responsibility to evalu-
ate the performance of bus operating compa-
nies based on the trip frequency at rush hour,
the safety of the operation, feedback from bus
riders, and ridership volumes.
The STC was initially skeptical at the early
stage of bus electrification with concerns of
higher costs, risk to service quality, and the
associated financial burden to the bus operat-
ing companies (Huang and Li 2019). However,
when government agencies reached consen-
sus on full electrification, the STC actively
facilitated the adoption of electric buses and
provided operational subsidies for bus operat-
ing companies. The STC also supports the
construction of charging infrastructure in
coordination with SUPLRC.
1.2.2 Incentive Policies of
Bus Electrification in
Shenzhen
Bus Purchase Subsidies
China’s national government provides subsi-
dies based on the electric vehicle range,
battery energy density, and other metrics to
promote the electrification of vehicle fleets and
the development of the technology. The
national purchase subsidy was matched by
Shenzhen’s local government for the NEVs
purchased in Shenzhen.
5
The local subsidy
amount was the same as the national subsidy
until 2016. Subsidies started to decrease
since 2017, and the local subsidy could not
exceed half the amount of the national
subsidy (table 1-1).
The Eco-System and Policy Environment 13
Table 1-1 National and local purchase subsidy for electric buses (thousand yuan)
The combination of purchase subsidies from
national and local government together
contributed more than 60 percent of the total
procurement cost of electric buses from 2015
to 2017.
Charging Infrastructure
Shenzhen announced the Blue-Sky Sustain-
able Action Plan (the Shenzhen Blue Plan) in
April 2018. The plan aims for an annual
average PM2.5 quality of lower than 26
ug/m3. The plan emphasized ten key areas
covering electrification of transportation
among others to meet its targeted goal. The
Shenzhen Blue Plan provided subsidy for the
construction of charging stations for all types
of EVs. Every charging terminal received a
subsidy of 600 yuan per kilowatt for direct
current (DC) fast charging. Alternating current
(AC) charging facilities with power rates
exceeding 40 kilowatts received a subsidy of
300 yuan per kilowatt whereas AC charging
facilities rated less than 40 kilowatts received
a subsidy of 200 yuan per kilowatt (SFB and
SDRC 2019).
In addition, during the large-scale rollout
stagewhere the land availability for charging
stations became a bottleneck for electrifica-
tion, the Shenzhen local government made
great efforts to address this issue, encourag-
ing land allocation by government agencies
and providing a simplified, fast-track review
and approval process for land use applica-
tions of charging infrastructure construction.
See detailed discussion in section 5.1.
Operation Subsidy
Like most other cities in China, transit bus
operation in Shenzhen relies heavily on the
municipal government subsidy. With diesel
bus operation, the subsidy fills the gap of fare
revenue and operation cost for the bus
operator. Additional subsidy was provided to
incentivize the operation of electric buses
especially at the early stage. According to an
official document from Shenzhen Finance
Bureau and Shenzhen Municipal Transporta-
tion Commission, the operation subsidy for
electric buses in Shenzhen was calculated
based on the annual mileage of the bus
14 The Eco-System and Policy Environment
Model Length (m)
Heavy duty
Medium duty
Light duty
10+ meters
8-10 meters6-8 meters
Subsidy (Thousand yuan)
2013–15
2013–15
2016
2016
2017–2020
2017–2020
National
Local
National
Local
National
Local
300
300
60–250
60–250
90
45
400
400
96–400
96–400
200
100
500
500
120–500
120–500
300
150
Year
operation—6.6 yuan per kilometer per bus
with annual mileage of more than 64,000
kilometers, with a cap at 70,000 kilometers.
For example, the STC provided 244,000 yuan
(USD 34,531) per bus each year of operation
subsidy to the SZBG with the diesel bus
operation. Battery electric buses (BEBs)
receive 420,000 yuan (USD 59,821) per bus
each year from the STC for their operation.6
This operation subsidy alone recovers about
87 percent of the operating costs for running
electric buses in the SZBG.
1.2.3 Industry and Private
Sector
Bus Operating Companies
The bus operating companies are on the
frontline of bus electrification. They face the
challenges of high investment, potentially high
operation costs, the uncertainty of evolving
technologies, and shortfalls in the number of
and the location of the charging stations. They
need to make procurement decisions on the
electric bus acquisitions, adopt operation
changes such as route and charging as well
as manage the transition of bus drivers and
maintenance staff. The top three bus-operat-
ing companies that provide the majority of
transit bus service in Shenzhen are Shenzhen
Bus Group (SZBG), Eastern Bus Company
(EBC) and Western Bus Company (WBC),
consolidated in 2007 from many smaller
private companies.
Shenzhen is not only the base of China’s
leading EV maker, BYD, but the city also
hosts the headquarters of several large
battery companies. Electrification of buses
has led to increasing involvement of organiza-
tions that did not have a big role in the city’s
public transport ecosystem previously includ-
ing vehicle manufacturers, charging service
providers, and grid companies.
Bus Manufacturers
The relationship between local governments
and the original equipment manufacturers
(OEMs) based in their territories is interdepen-
dent. While the local government relies on
local industries for GDP growth and tax
collection, the local industries rely on the
government for better industry policies,
subsidies, and joint promotion of products.
Sharing responsibility with OEMs has been
underlined as a prerequisite for the successful
operation of electric buses.
Collaboration with bus operating companies
closely allows manufacturers to detect and
improve technological deficiencies related to
the early electric bus models. With the benefit
of frequent communication and feedback from
bus operators, bus manufacturers can
upgrade their vehicle technology at a faster
pace. On the other hand, the manufacturers
provide an extended warranty on the key parts
of the electric bus that covers the lifetime of a
bus in Shenzhen. The manufacturers also
provide technical and maintenance support as
well as training for bus operators to relieve
their concern on the uncertainty of the
technology. This cooperation provided the
SZBG with more confidence in their ability to
operate electric buses, and provided signifi-
cant relief on operational costs.
Charging Service Providers
Charging service providers—who typically are
responsible for the construction and operation
of charging stations—benefit from investment
in the charging facilities that enabled them to
enter the charging market for long-term
revenues, especially the earlier movers.
Charging service providers function as a
conduit between grid companies and bus
operators by assessing grid capacity and
providing additional transformer and power
lines as necessary. Some grid companies also
enter the market to provide charging services.
The Eco-System and Policy Environment 15
1.2.4 Bus Passengers
Passengers are the users of the system and
their satisfaction is the ultimate objective of
operating companies and governments. The
SZBG conducts passenger satisfaction
surveys every year and evaluates its service
according to six criteria: affordability, conve-
nience, safety, regularity, comfort, and driver’s
service. Passengers showed very high
satisfaction level of electric bus services.
According to the same survey, and of relevant
importance, comfort is the most important
aspect for passengers, followed by safety
and affordability. Passenger interviews
showed that the cleaner and smoother ride of
an electric bus contributed to high satisfaction
in comfort. The buses run more quietly than
diesel buses, and the smell of diesel exhaust
at bus stations has disappeared.
The stakeholders and their roles in the
ecosystem for the electrification of buses in
Shenzhen are summarized in table 1-2 (see
next page).
16 The Eco-System and Policy Environment
Table 1-2 Stakeholder in Shenzhen Bus Electrification
The Eco-System and Policy Environment 17
Govern-
ment
End User
Industry
Public Bus Operating
Companies
NEV
Manufacturers
Financial
Agency
Charging
Industry
Bus
Passengers
Central
Government
Local
Government
NDRC: National Development
and Reform Commission
MOST: Ministry of Science and
Technology
MIIT: Ministry of Industry and
Information Technology
MOHURD: Ministry of Housing
and Urban-Rural Development
MOF: Ministry of Finance
SDRC: Shenzhen Development
and Reform Commission
SFB: Shenzhen Finance Bureau
STC: Shenzhen Transportation
Commission
SUPLRC: Shenzhen Urban Planning,
Land and Resources Commission
SEB: Shenzhen Electricity Bureau
District offices
Shenzhen Bus Group, Eastern Bus
Company, Western Bus Company
BYD, NJGD, WZL
Bank of Communications
Charging facility provider, i.e.,
Potevio, Winline
China Southern Power Grid (CSG)
Passengers
Sector Sub-Sector Department and Groups Roles and Responsibility in NEV
Development
Initiate the NEV development plan
Guide technology development
Lead the NEV industry development
Manage land allocation and requirements
for constructing charging facilities
Manage NEV related incentive policy
Initiate the NEV develop plan for Shenzhen
Manage the NEV related local subsidies
Supervise the transportation industry in
Shenzhen; manage the adoption and
operation of transit bus companies
Support charging facility construction and
operation
Coordinate the connection of charging
stations to the electricity grid
Facilitate land use and electricity connection
for charging stations
Purchase, operate and maintain electric buses
Provide electric bus products, and
maintenance and repair services and training
Provide financial services
Provide charging facilities and management
Ride electric buses, and provide feedback to
bus companies
Power
Grid
Provide electricity connection to the grid and
related infrastructure
18 The Eco-System and Policy Environment
Reference
1
Crippa, M., Guizzardi, D., Muntean, M., Schaaf, E.,
Solazzo, E., Monforti-Ferrario, F., Olivier, J.G.J., Vignati,
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978-92-76-21515-8, doi:10.2760/143674, JRC121460
2
Huang, Ping, and Ping Li. 2019. “Politics of Urban
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3
International Energy Agency. 2017. Global Electric
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b/2019/gb1087/201901/t20190130_15533201.htm
Notes
1
Shenzhen Urban Transportation Planning Center,
Shenzhen Transport Annual Report 2018
2
http://worldpopulationreview.com/world-cities/shen-
zhen-population/
3
https://www.chinadaily.com.cn/a/201902/28/WS5c772
0fda3106c65c34ebd70.html
4
http://wap.sz.gov.cn/zfgb/2017/gb1007/201706/t2017
0612_6992333.htm
5
To be eligible for the purchase subsidies, the NEV
needs to be listed in the “Recommended Model
Catalogue”. MIIT has maintained the national-level eligible
NEV model catalogue, and SDRC has been managing
and updating the city-level NEV model catalogue, which
overlaps but with some difference with the national-level
catalogue.
6
Subsidy of Electric Bus During Promotion Period in
Shenzhen, Shenzhen Finance Commission and Shenzhen
Transportation Commission, 2017, http://www.sz.gov-
.cn/zfgb/2017/gb1007/content/post_4983581.html
The Eco-System and Policy Environment 19
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2013. “New Energy Vehicles in China: Policies, Demon-
stration, and Progress.” Mitigation and Adaptation
Strategies for Global Change 18 (2): 207–28. https://-
doi.org/10.1007/s11027-012-9358-6
4
Lajunen, Antti, and Timothy Lipman. 2016. “Lifecycle
Cost Assessment and Carbon Dioxide Emissions of
Diesel, Natural Gas, Hybrid Electric, Fuel Cell Hybrid and
Electric Transit Buses.” Energy 106 (July): 329–42.
https://doi.org/10.1016/j.energy.2016.03.075
5
Nurhadi, Lisiana, Sven Borén, and Henrik Ny. 2014.
“A Sensitivity Analysis of Total Cost of Ownership for
Electric Public Bus Transport Systems in Swedish Medium
Sized Cities.” Transportation Research Procedia, 17th
Meeting of the EURO Working Group on Transportation,
EWGT2014, 2-4 July 2014, Sevilla, Spain, 3 (January):
818–27. https://doi.org/10.1016/j.trpro.2014.10.058
6
Palmer, Kate, James E. Tate, Zia Wadud, and John
Nellthorp. 2018. “Total Cost of Ownership and Market
Share for Hybrid and Electric Vehicles in the UK, US and
Japan.” Applied Energy 209 (January): 108–19. https://-
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7
Wu, Geng, Alessandro Inderbitzin, and Catharina
Bening. 2015. “Total Cost of Ownership of Electric
Vehicles Compared to Conventional Vehicles: A Probabi-
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doi.org/10.1016/j.enpol.2015.02.004
8
Xiong, Ying, Yongwei Zhang, and etc. n.d. “Analysis
on Developing a Healthy Charging Service Market for EVs
in China.” Accessed October 23, 2019. http://nrdc.cn/infor-
mation/informationinfo?id=204&cook=1
Chapter 2
Shenzhen Bus Group
and Its Electrification
2.1 Shenzhen
Bus Group
Shenzhen is served by three major bus
operating companies: the SZBG, Eastern Bus
Company (EBC), and Western Bus Company
(WBC). All three are joint ventures with public
and private shares. The three companies run
routes in the central urban area and outer
districts. Meanwhile, several other small
bus-operating companies run a small number
of bus routes in suburban areas.
The SZBG is the oldest company among the
three major bus companies, having started its
bus service in 1975, under the name of Bao’an
County Shenzhen Town Bus Company. At this
humble stage, they only operated one route
with two buses and had twelve employees.
The company was restructured as a
state-owned bus operating company in 1983. It
was restructured again as a joint venture
company with investments from Hong Kong
SAR, China in 2004. The SZBG has three
major stakeholders: public share (55%),
Kowloon Motor Bus of Hong Kong SAR, China
(35%), and others (10%).
Among the three main bus operating compa-
nies, the SZBG serves 319 routes, had 5988
buses in operation in 2019, and carried about
594 million passenger trips in 2019 (table 2-1).
Overall, the SZBG accounted for a little more
than one third of the number of routes, total
kilometers, and total passenger trips of the
three major companies (table 2-2). The
average annual running distance for each bus
was similar for the three bus operating compa-
nies with about 61,000 kilometers per bus
each year.
20 The Eco-System and Policy Environment
Table 2-1 Operational data of the three transit bus companies in Shenzhen (2019)
SZBG
EBC
WBC
Total
Number
of Routes
319
269
332
920
Length of
Routes
(km)
6,932.11
7,218.74
6,937.28
21,088.13
Number
of Buses
5,988
5,795
4,976
16,759
Annual Bus-
Travel
Distance
(million km)
365.49
356.37
304.91
1,026.77
Annual
Passenger
Trips
(million)
594.01
470.21
453.26
1,517.48
Ticket Fare
Revenue
(million yuan)
1,290.11
1,187.02
1,004.43
3,481.57
Table 2-2 Per route bus statistics of the three transit bus operating companies in Shenzhen (2019)
SZBG
EBC
WBC
Average
Average
Route
Length
(km)
21.73
26.84
20.90
22.92
Average No.
of Buses
per Route
18.77
21.54
14.99
18.22
Annual Bus-
Running
Distance
per route
(million km)
1.15
1.32
0.92
1.12
Annual
Passenger
Trips per
Route
(million)
1.86
1.75
1.37
1.65
Annual Travel
Distance
per Bus
(thousand km)
61.04
61.50
61.28
61.27
Annual
Passenger
Trips Carried
per Bus
(thousand)
99.20
81.14
91.09
90.55
SZBG’s buses are operated by five bus subsidiary companies divided into 67 bus fleets. The business
areas of the SZBG include city bus, medium- and short-distance bus services, taxis, vehicle rental
service, vehicle parts, vehicle repair and maintenance, housing, property management, hotel, advertis-
ing, and retail operations. With the introduction of electric vehicles, the SZBG has also entered the
market of electric vehicle (EV) charging infrastructure including design, construction, operations, and
maintenance.
The SZBG receives substantial amounts of subsidies from Shenzhen municipality based on the total
mileage of bus services provided. Besides the subsidy, the main revenue of the SZBG is ticket fare of
bus and taxi services (figure 2-1). The bus service is considered public welfare in Shenzhen, so the
fare is kept low. With the subsidy, the SZBG turned in profits of 101 yuan million in 2018 (figure 2-2).
Shenzhen Bus Group and Its Electrification 21
Source: The Shenzhen Bus Group Annual Report 2019
Figure 2-1 Total Income of SZBG in 2018 (million yuan)
Figure 2-2 Comparison between Revenue and Operating Cost of SZBG 2013–18
22 Shenzhen Bus Group and Its Electrification
2735
1349
400
148
Bus Ticket Revenue
Taxi Revenue
Other Revenue
Subsidy
2013
2014
2015
2016
2017
2018
Subsidy Revenue
0
million yuan
200
100
300
400
500
Operating Revenue
Operating Cost
2.1.1 Routes and Fare
The SZBG operated nearly 330 service routes with 5,998 buses, as of December 2019 (table 2-3).
Table 2-3 Different type of bus lines of SZBG
Shenzhen Bus Group and Its Electrification 23
Type of Line Function Operating Hour Fare
Routine and main bus
lines (202 routes)
Branch lines
(45 routes)
Express lines
(29 routes)
Night lines
(20 routes)
Rush hour lines
(34 routes)
Regular fixed bus routes
Connect communities to metro
stations or shared bus terminals
Connect business centers
and large communities with few
stops in-between
Night operation
Additional service provided
during peak commuting hours
with fewer stops (some operate
only one direction)
6:30 - 23:00
6:00 - 20:00
6:30 - 23:00
23:00 - 6:30
morning peak (07:00 -
09:00) and evening
peak (17:00 - 19:30)
2 yuan ($0.28) or 10
yuan ($1.4) for long-
distance trips
1 yuan
($0.14)
1-2 yuan
($0.14-0.28)
1-2 yuan
($0.14-0.28)
3-7 yuan
($0.43-1.00)
Note: $ refers to USD. The number of routes operating in the SZBG are under continuous adjustment, so the numbers vary
through the report at different stages.
Figure 2-3 SZBG’s Bus routes
Note: Display from the SZBG’s Intelligent Transportation Center Operation Management System. Light blue lines are the routine
lines in operation at the time.
SZBG’s bus routes vary in length from 2–74
kilometers, though most vary between 12 and
28 kilometers (figure 2-3). Each route has 18
buses on average, but some routes do operate
with as many as 75 buses. Passengers pay
between one and ten yuan, while most routes
are priced at two yuan.
2.1.2 Ridership
Shenzhen’s bus and the metro system support
the bulk of public transport modes while ten
percent of passenger trips are made by taxi.
With the metro system expanding rapidly, the
annual bus passenger ridership dropped
from 2.2 billion in 2013 to 1.6 billion in 2018.
Patronage of the SZBG buses dropped from
833 million riders in 2013 to 607 million in
2018, decreasing eight percent annually on
average (figure 2-4). Shenzhen’s metro
network development plan of 2016–2030
would increase its service to 32 lines, with
1142 kilometers in operation by 2030. Bus
ridership continued declining after the metro
line extended from 178 to 286 kilometers in
October 2016 (figure 2-5). The role of bus
services in Shenzhen is to provide more
feeder services to the metro network. Conse-
quently, the bus network has been restruc-
tured to provide a more flexible service to the
passengers.
24 Shenzhen Bus Group and Its Electrification
Figure 2-4 Public transport trips in Shenzhen
Source: SZBG Annual Report 2014–19.
2013
2014
2015
2016
2017
2018
Passenger Trips (million)
0
3000
1500
4500
Taxi
Metro
Bus_Other
Bus_SZBG
Shenzhen Bus Group and Its Electrification 25
COVID-19
outbreak
Metro
Expansion
Figure 2-5 Passenger trips and number of buses before and after fully electrification
0
50
100
150
200
250
300
350
4400
4600
4800
5000
5200
5400
5600
5800
6000
6200
2013
2014
2015
2016
2017
2018
2019
2020
Number of Buses (right y axis)
Daily Travel Distance (km/veh) (left y axis)
Monthly Passenger Trips (million) (left y axis)
Full Fleet
Electric
Buses
Note: The x axis represents the year and month of the events. After the extension of the metro network in October 2016, the bus
operating distance (yellow line) and the bus passenger trips have been dropping gradually. After full electrification in July 2017,
the monthly passenger trips (green line) were maintained stable until the COVID-19 outbreak in January 2020.
However, with the full electrification of its bus fleet in July 2017, the SZBG witnessed a ridership
increase of 2.4 percent. SZBG’s bus ridership started to rise slightly following its full electric replace-
ment for two years into 2019 until the COVID-19 outbreak. However, how much of this increase was
because of the electrification is unclear, as Shenzhen also introduced on-demand services as well as
more flexible routes to connect suburban communities and metro stations about the same time.
2.1.3 Staffing
The SZBG had 27,460 employees on its payroll in March 2019, most of whom were drivers (figure
2-6) (see next page).
Table 2-4 Electric bus models of SZBG fleet in the end of 2020
% of fleet
3.18%
66.87%
16.21%
2.56%
0.50%
0.55%
0.67%
4.19%
1.09%
1.84%
0.17%
1.68%
0.64%
Procurement
Year
2013
2015-17
2016
2016
2016
2016
2017
2017
2017
2019
2019
2019
2020
Number
190
3990
967
153
30
33
40
250
65
110
1
100
38
OEM
BYD
BYD
NJGD
BYD
BYD
BYD
BYD
BYD
NJGD
BYD
BYD
NJGD
BYD
Length (m)
12
10.49
8.49
10.49
10.2
7.1
10.35
10.69
8.49
8.49
10.49
6.8
6.99
Model
K9B
K8
H85
C8A
K8S
K6
K8S
C8B
H85
K7
K8
H60
B6
Lifetime
(years)
8(+2)
8(+2)
5(+2)
8(+2)
8(+2)
5(+2)
8(+2)
8(+2)
5(+2)
5(+2)
8(+2)
5(+2)
5(+2)
Figure 2-6 SZBG’s different categories of employees per electric bus as of 2019
26 Shenzhen Bus Group and Its Electrification
Model #
CK6120LGEV1
CK6100LGEV2
NJL6859BEV9
BYD6100LLEV
BYD6100LSEV
BYD6711HZEV
BYD6100LSEV1
BYD6110LLEV
NJL6859BEV43
BYD6850HZEV5
BYD6100LGEV9
NJL6680EV4
BYD6700B2EV1
1.74
Driver
Conductor
Maintenance
and Repair
Technicians
Ancillary
Working Staff
Manager
Fleet
Manager
Working Sector
Manager
Other Staff
0.40 0.31 0.30 0.18 0.22 0.06 0.003
0.00
1.00
2.00
Note: ‘+2’ represents the lifetime can be extended for 2 years based on actual usage.
2.1.4 Bus Fleet
Among the entire SZBG bus fleet of 5,967 buses, 4,654 were heavy-duty buses with a bus body
length of more than ten meters and 1,313 were medium-duty buses of less than ten meters. The fleet
is primarily composed of buses from BYD (81%) and Nanjing Golden Dragon Bus (NJGD) as shown
in table 2-4. The dominant model BYD K8 is 10.5 meters long and has a 250 kilometer-battery range,
characterized by a two-hour DC fast charging or 4–5-hour AC slow charging (figure 2-7).
Figure 2-7 Dominant bus model in SZBG
BYD K8
2.1.5 Charging
Infrastructure
The SZBG worked closely with charging
operators or charging service providers on the
charging station construction and operation.
The SZBG had 104 charging stations for their
buses by the end of 2019 (figure 2-8). An
additional ten stations are under the construc-
tion and about 20 more stations are planned
for construction. The 104 available charging
stations supply a total of 1,707 charging
terminals with 2,989 charging plugs.
Shenzhen Bus Group and Its Electrification 27
Figure 2-8 Locations of charging stations and maintenance workshops of SZBG
Note: Display from the SZBG’s Intelligent Transportation Center Charging and Maintenance System. Light dots with a flash sign
inside are charging stations; dots with a tool sign inside represent maintenance workshops. Light blue color means the
occupancy rate is less than 50%; light green color means the occupancy rate is more than 50% but less than 80%; orange color
means the occupancy rate is more than 80%.
2.1.6 On-demand Bus
Services
On-demand electric bus services including
the Youdian bus and U+ minibus service were
introduced for travelers via the Youdian
Chuxing application on mobile devices. The
application was jointly developed and operat-
ed by the SZBG and DiDi Chuxing Compa-
ny—the top ride-hailing company in China.
The Youdian bus service was launched in
2016 to meet commuting demand with direct
services that were not covered by regular bus
routes. With the Youdian Chuxing smartphone
application, passengers can request a direct
bus service between an origin and destination
pair, either joining an existing route request or
adding a new route. If the proposed new route
receives enough passengers, then the
customized bus service would start operation.
The bus routes are constantly updated based
on passengers’ demand. Typically, this
service is more expensive than the regular
bus fare and passengers can purchase tickets
to reserve a seat using their mobile phone.
Table 2-5 Timeline of Shenzhen bus electrification
28 Shenzhen Bus Group and Its Electrification
Time
May 2008
June 2009
July 2011
September 2012
November 2015
June 2017
Event
First hybrid bus in trial operation
10 hybrid buses in service
101 electric buses and 26 electric minibuses in service
First bus line with all electric fleet launched
545 electric buses, 100% electrification target set by the STC
Electrification completed with 6053 electric buses
Approximately 1,008 Youdian bus routes were
operated in 2018.
U+ minibus service was launched in 2019 to
serve first- and last-mile mobility. It is a dynamic
on-demand service without fixed routes or
stops—so called micro-transit. The service can
respond to the passengers’ real time travel
requests. The application matches passengers’
demand with the minibuses’ routes so that their
routes in this system are dynamic and subject
to minor detours to allow sharing while accom-
modating individual requirements.
2.2 SZBG’s Bus
Electrification
Journey
The SZBG electrified its bus fleet over eight
years from 2009 to 2017 (table 2-5). The
procurement was phased, dividing bus procure-
ment in batches.
The electrification has three phases: a
demonstration stage in 2009–2011, followed
by targeted electrification from 2012–2015,
and large-scale electrification from
2016–2017.
China’s nationwide NEV promotion started
with the “Ten Cities with One Thousand
Electric Vehicles” demonstration program in
2009. Shenzhen was one of the ten leading
cities selected for early demonstration. The
SZBG was one of the first operating compa-
nies to purchase the WZL plug-in hybrid
electric buses at that time. These plug-in
hybrid buses turned out to have less reliability
and higher outage rate during operation than
diesel buses and BEBs, hence the manage-
ment team decided to shift to a full-electric
strategy soon after this purchase. Since then,
these hybrid buses get phased out after eight
years of operation, and the SZBG has not
purchased anymore.
In 2011, Shenzhen hosted the International
26th Universiade1and launched 101 Build
Your Dream Company (BYD) K9 model
buses, all of which were BEBs. All newly
purchased buses from 2011 onward by the
SZBG were BEBs. One hundred and ninety
BYD K9 buses and 210 A10 buses from WZL
(see detailed fleet composition in table 2-4)
were added to the SZBG electric bus fleet in
2013. With the operation of the vehicles in
these two stages, the SZBG has built confi-
dence in the use of new technology for transit
buses.
Three batches of 1,600, 3,573 and 355
electric buses were procured from 2015 to
2017, completing the fleet electrification. The
SZBG became the first transit bus company
worldwide with a 100 percent electric bus fleet
with 6,053 buses on June 8, 2017. All the
16,539 buses across the entire three bus-op-
erating companies in Shenzhen were electric
by the end of 2017 (figure 2-9).
Figure 2-9 The Electrification journey shown in bus composition of SZBG fleet
Shenzhen Bus Group and Its Electrification 29
SZBG Bus Fleet
CNG
Diesel
Hybrid
Electric
0
4000
2000
6000
2020
2013
2014
2015
2016
2017
2018
2019
Note: The chart states the number of buses with different fuel at every half year. With more electric vehicles replaced traditional
buses in the fleet, the SZBG reached 100% electric bus fleet in July 2017.
The SZBG first planned charging stations at bigger terminal stations serving multiple routes to provide
service for buses running on several different routes. Longer routes and more frequent operations
were provided with another charging station at the other terminal of the route. After several years of
development of charging infrastructure, most of the routes have access to at least one charging station
at the terminal of each route.
Charging operators provide the construction, operation and management of the charging infrastructure.
Potevio Group Corporation (Povetio, green dots) and Winline Technology (Winline, blue dots) in figure
2-10, are the two largest charging operators who provide the SZBG with most of the charging facilities.
Potevio Group Corporation built and provided most of the charging stations for the SZBG. After 2017,
more companies entered the market and built a significant number of new bus charging stations.
Before constructing any charging station, the SZBG communicates frequently with the charging
facilities provider on multiple factors including location, size, charging speed, and charging capacity of
the stations. The SZBG pays the charging operators the electricity fees and a charging service fee.
Figure 2-10 SZBG charging stations, available years and operators
30 Shenzhen Bus Group and Its Electrification
Notes
1
http://www.newsgd.com/specials/Universiade/de-
fault.htm
Reference
1
Huang, Ping, and Ping Li. 2019. “Politics of Urban
Energy Transitions: New Energy Vehicle (NEV) Develop-
ment in Shenzhen, China.” Environmental Politics 0 (0):
1–22. https://doi.org/10.1080/09644016.2019.1589935.
2
Wang, Yunshi, Daniel Sperling, Gil Tal, and Haifeng
Fang. 2017. “China’s Electric Car Surge.” Energy Policy
102 (March): 486–90. https://doi.org/10.1016/j.en-
pol.2016.12.034.
Shenzhen Bus Group and Its Electrification 31
4
Part I Key Lessons:
Coordination and
Collaboration
One of the main challenges in urban mobility in
cities in China is the lack of cross-agency
communication and coordination. Departments
within the same municipal government are
often reluctant to share information, and
sometimes compete for resources with
overlapping responsibilities. Unlike traditional
bus companies, bus manufacturers and gas
stations who dealt with mature products and
clear supply chains, the electric bus was new
with unclear roles and responsibilities among
players. With more sectors and players
involved, the transition to electric public
transport requires even wider scale of coordi-
nation and policy synergy. Uncertainties of the
technology and supply chain as well as
demand response also require a viable model
for all stakeholders to collaborate.
Shenzhen’s Solutions
Coordination: Shenzhen municipal govern-
ment established the Shenzhen Energy
Conservation and New Energy Vehicle
Demonstration and Promotion Leading Group
(SNEVLG) that engages all levels of its diverse
stakeholders to participate actively through
frequent deliberations to achieve consensus
and cooperation among different parties
towards the same goal—promoting NEV
development.
Collaboration: The Government, vehicle
manufacturers, charging service providers,
and bus operators collaborated closely through
a viable business model with risks and costs
allocated to the appropriate party. SZBG’s
close dialogue with the transportation bureau,
the development and reform commission, the
state-owned assets supervision and the
administration commission put SZBG’s agenda
to the forefront of the policy development.
Manufacturers provided extended warranties
for the key parts of the electric buses, espe-
cially the batteries. While increasing the
purchase price of buses, it shifted the technol-
ogy risk to manufacturers who have the
highest technical capacity to manage such
risks, so are incentivized to keep innovating
and improving bus performance. SZBG’s close
partnership with the bus manufacturer—for
example, onsite supervision at the manufactur-
ing stage—and the charging service provid-
er—service standard and depot renova-
tion—proved to be critical in overcoming the
technology maturity, financial, and operation
challenges. The SZBG also collaborated
productively with private enterprises and
nonprofit organizations including Tencent,
Huawei, BYD, Didi Chuxing, the Urban
Transportation Association, and Haylion
Technology to explore innovations on intelli-
gent dispatch systems, on-demand bus
service, route optimizations, and autonomous
driving technologies.
Public Consulting and Participation: The
SZBG cares about the voice of the passen-
gers. The SZBG conducts three types of
activities to address their concerns. SZBG’s
first campaign “Friends of the Bus” in 2010 is
an online and offline service where passen-
gers can leave comments and take part in
events such as focus-group forums and polls.
By doing so, the SZBG was able to ensure
comments from passengers were addressed
efficiently using an online platform. Also, the
SZBG regularly hosts offline events to get to
know its passengers. Further, the SZBG
collects large datasets to understand their
customers: SZBG’s intelligent dispatch system
was built upon collecting detailed traveling
origin and destination data of its passengers
and the bus operation. The SZBG can analyze
the demand and onboard occupancy to
optimize the routes further and improve its
quality of service.
2
Business Model
and Implementation
Chapter 3
The Business Model
3.1 Ownership
and Financing
Even with sizable national and local govern-
ment subsidies, the purchase price of electric
buses is still much higher than conventional
buses. The SZBG used a financial leasing
model that introduced a financial leasing
company for instance, of a bank, that would
purchase and own the vehicles and lease
them to the SZBG. The bus operating compa-
ny would take ownership of the vehicles after
the leasing period is over. Since the leasing
period equals the total life of the buses, this
arrangement turned the high-cost procurement
into a much easier manageable annual rental
or lease payment.
The SZBG has used two business models
during its electrification process, the early
stage bus-battery separation lease model and
the later whole-vehicle lease model.
3.1.1 Bus-battery
Separation Lease
At the early stage of the electric bus deploy-
ment from 2011–2013, vehicle technology was
not mature, especially with the reliability of
batteries. At that time, vehicle manufacturers
usually did not produce batteries, and there-
fore did not offer warranties for batteries. The
SZBG acquired the battery and the vehicle
separately to minimize the operational and
financial risks of battery deficiency. In practice,
the Shenzhen government signed a conces-
sion agreement to allow one state-owned
enterprise (SOE), Potevio Group Corporation
(PGC), to be the charging service provider
that purchased and took ownership of the
batteries. PGC also provided guarantees for
the SZBG to the financial leasing compa-
ny—the financial leasing branch of the Bank
of Communications—that purchased the
electric vehicles without batteries and then
leased the buses to the SZBG. The SZBG
34 The Business Model
3.1.2 Whole-vehicle Lease
As the purchase price of electric buses
decreased from 2015 onward and battery
reliability improved, and government subsidies
for electric bus purchase and operation
stabilized, the SZBG no longer needed a
commissioned SOE to provide guarantees to
get reasonable rates for the leases. Financial
leasing became the whole-vehicle lease
model, where the SZBG directly worked with
the financial leasing company to lease the
whole bus. With the leasing plan, the SZBG
pays the lease seasonally to the financing
leasing company with an annual interest of
about four percent over the lifetime of the
buses which is eight years. The manufactur-
ers were paid in three payments of 60
percent, 30 percent and 10 percent of the
purchase contract value—and did not include
the purchase subsidies that were paid directly
to the manufacturers by the government—by
the financial leasing company as the accep-
tance payment, mid-term use payment, and
retention payment over the lifecycle of BEBs.
paid annual leases over eight years to PGC for batteries and to the financial leasing companies for
the buses with a leasing agreement. In addition, the SZBG paid an annual service fee for PGC to
provide charging and battery maintenance and recycling services (figure 3-1).
The early batch of electric buses acquired in 2011 used this model when Shenzhen hosted the
Summer Universidad. This model worked in overcoming upfront financial barriers by shifting financial
risks to financiers, charging service providers, and vehicle manufacturers. However, the technology
was still nascent in the developing stage, and the poor quality of the battery for the initial batches not
only led to PGC’s financial loss but also disruptions of SZBG’s bus operation.
Figure 3-1 Bus–Battery Separation Financial Leasing Model
Financial Leasing
Company
Bus Operator Charging Service Provider
Electric Bus Manufacturer
trade vehicle
without battery
after-sale services
National & Local Governments
National & Local Governments
vehicle sale/
production subsidy
operating subsidy charging subsidy
Battery Manufacturer
trade battery
charging & mantenance
service
The Business Model 35
The bus manufacturer provides lifetime
warranty1 for the battery, electric motor, and
controller, known as the “3-e system” accord-
ing to the contract signed. Charging service
providers construct and operate the charging
facilities while the SZBG pays the charging
service fee. This is more efficient than the
bus–battery separation model because fewer
parties are involved with lower transaction
costs. SZBG’s financial leasing model has
demonstrated a viable way to overcome the
financial barrier of electrification (figure 3-2).
Based on this whole-vehicle lease financing,
the SZBG established a viable model where
players with different specializations are
responsible for the businesses of their own
expertise while bearing the risks that they are
in the best position to manage. The buses
and batteries are owned by the financial
leasing company with lifecycle warranty for
key parts offered by bus manufacturers. The
charging facilities are owned by the owners of
depots, which can be the SZBG, charging
operator, or others. The charging service
provider and the SZBG fleet operators can
then focus on the operation and management
of the charging facilities and the bus fleet
respectively.
Figure 3-2 Whole-Vehicle Lease Financial Leasing Model
36 The Business Model
Financial Leasing
Company
Bus Operator Charging Service Provider
Electric Bus Manufacturer
pay for the whole bus
in 3 tranches
provide whole vihicle plus
warranty for 3e system
National & Local Governments
National & Local Governments
vehicle sale/
production subsidy
operating subsiduy charging subsiduy
3.2 Allocation of
Responsibilities
within SZBG
• SZBG headquarters plans and
adjusts the bus routes or stops and reports to
STC for review and approval. STC may also
request route and stop changes based on
needs at the network level or for emergency
or event needs. All bus schedules are made at
the central bus dispatching center in consulta-
tion with dispatchers from each subsidiary
company. The headquarters plans the budget
for maintenance and repairs and provides
guidelines to the subsidiary companies. SZBG
headquarters also coordinates with other
parties such as the vehicle manufacturers,
charging facility operators, and the grid.
• SBG subsidiary companies, includ-
ing subsidiary electric bus and taxi operators,
are responsible for the actual operation
including drivers and dispatchers, mainte-
nance and repairs of vehicles, and facilities in
depots. Specifically, fleet operators manage
buses and taxis, conduct daily safety checks
and inspections while the workshops at
depots handle maintenance and repair works.
3.3 New
Business Model for
Electric Taxis
The SZBG started its taxi operation with only
150 traditional internal combustion engine
(ICE) vehicles in 1992. By mergers and
acquisitions, its taxi fleet grew to about 6,000
taxis managed by 13 subsidiary taxi compa-
nies. Nine of them are operating in Shenzhen
and four of them run businesses in other
cities.
The SZBG started a joint venture with BYD in
2010 to establish a subsidiary taxi company
Pengcheng Electric Taxi (PCET) and piloted
the first 100 electric taxis. More pilot programs
followed from 2011 through 2014, bringing the
total number of SZBG-owned electric taxis to
850. Large-scale conversion started in 2017
with strong government support and mandate.
By the end of 2018, the SZBG was managing
approximately 7,700 taxi drivers and was the
owner of 4,681 taxis operated in Shenzhen, all
battery electric and accounting for about
one-fourth of the total taxi fleet in Shenzhen.
Before the electrification, the taxi business in
Shenzhen was facing challenges; operating
costs were increasing with the rapid economic
growth in Shenzhen, but the taxi fare was
highly regulated. Taxi drivers were contem-
plating changing jobs as income kept falling.
The SZBG saw the potential to reform and
revive the taxi sector by leveraging govern-
ment support to develop NEV.
The Business Model 37
Table 3-1 Operating cost comparison of electric taxis and gasoline taxis (yuan/1,000km)
Operating costs (yuan/1,000km)
Fixed costs
1) Depreciation
2) License fee
3) Labor cost
4) Other fixed
Variable costs
1) Energy
2) Maintenance & Repair
Total
Electric taxis
614
227
0
292
95
456
310
146
1,071
Gasoline taxis
653
107
264
210
73
889
791
98
1,542
Difference
-6.00%
113.01%
-
39.26%
29.31%
-48.63%
-60.75%
49.21%
-30.57%
Source: PCET 2014, Large-Scale Operation and Management of Pure Electric Taxi Fleet
Assuming a fleet size of 800, the cost of
operating electric taxis is 30.57 percent lower
than the cost of operating gasoline taxis (table
3-1) , mainly due to its much lower energy
cost by switching from gasoline to electrici-
ty—the waived license fee for NEV offset both
higher vehicle depreciation and labor cost.
The SZBG developed a business model for
electric taxis to maximize technical specialty
and risk management capacities. PCET
signed operating contracts with individual
drivers, who would pay PCET a fixed
fee—monthly vehicle rental plus maintenance
and repair fee. PCET covers the vehicle
purchase, and maintenance and its repair
services are provided by the vehicle manufac-
turer via a contract. PCET collaborates with
charging service providers to offer charging
services. Drivers get all the revenue deducting
the monthly fee to PCET and charging (figure
3-3). Using this model from 2012 when PCET
was running 800 electric taxis, the operation
of PCET turned profitable.
38 The Business Model
Figure 3-3 Collaboration Model of PCET (based on PCET 2014)
According to the interviews with taxi drivers,
changes to drivers’ income appear to be
different; some decreased and some
increased after the electrification. The nonop-
erating hour for charging time—three hours
per shift at the early stage when charging
stations were scarce—meant a significant
loss of revenue compared to the ten minutes
of gas-refueling time. Competition from
ride-hailing taxi service companies such as
Didi Chuxing also contributed to this matter.
Range anxiety still exists; drivers at certain
times have to give up more profitable
long-distance trips—for example, to the
airport or Dongguan City—because of the
potential need of charging. On the other hand,
the taxi company PCET for instance,
decreased the fixed monthly fee of 8,000
yuan per vehicle for a single-shift taxi or
11,000 yuan for a double-shift taxi after the
electrification to compensate for the loss of
operating time. The fixed maintenance fee of
1,500 yuan per month is also less than
gasoline taxis, and drivers can liberate
themselves from concerning any vehicle
malfunctions. Moreover, the charging cost is
significantly less than fuel cost, saving 100
yuan per day of operation. The SZBG also
created a bonus system based on the result
of drivers’ evaluations that incentivized drivers
to provide better service. These bonuses
rewarded outstanding performances on
energy-saving, mileage bonus, good conduct
bonus and service excellence. These bonus-
es kept the SZBG being competitive in both
the labor and taxi market.
The Business Model 39
Passenger
PCET
Charging Service Provider
Vehicle Manufacturer
Purchase Subsidy
Government
Vehicle Sale
Maintenance &
Repair Contract
Driver
Satisfaction
Feedback
Operating
Contract
Supervise
Service
Service
Waive License Fee
Supervise Social
Responsibilities
Note: Based on PCET 2014.
Notes
1
Battery producers provided four years of warranty.
Chapter 4
Acquiring and Managing
an Electric Vehicle Fleet
• Innovative financing model to overcome high upfront acquisition costs by sharing
the risk of technology uncertainty
• Open bidding procedures to ensure the competitiveness of electric bus’s quality
and price
• Lifetime warranty for the 3-e system from manufacturers lowers the technical
and financial risks of bus operators
• Operator’s involvement in the manufacturing process for technical improvement,
for example, the onsite manufacturing supervision
• Professional charging service providers to construct and operate charging; The
issue of land availability for charging infrastructure especially in the urban core
• The local grid capacity expansion might make up as much as one third of the
total investment cost of a charging station by consulting with local grid
1
4.1 Planning and
Technology Selection
Before launching the new electric bus fleet on
the road, massive preparation and analyses
were undertaken. The various type of works
included analyzing the existing bus routes,
choosing the right bus type, providing training
courses to bus drivers and electricians, and
evaluating the potential impact on the electrici-
ty grid to ensure the capacity was compatible
with the new charging demand.
4.1.1 Analysis of climate,
topography and bus routes
Climate: Shenzhen has a subtropical marine
climate with temperature between 0°C and
40°C and an average temperature of 23°C.
While warm climate is generally good for
electric bus operation,
1
summer’s extreme
heat requires air conditioning that consumes
additional electricity, and that shortens the
running distance per charge. Data of SZBG
bus fleets (figure 4-1) show that the average
electricity consumption of electric buses per
100 kilometers in summer is 19.3 percent
more than non-summer months. This addition-
al energy consumption of almost 20
percent—or reduction of running distance—by
switching on air conditioning is higher than the
ten percent estimated by previous research.1
The heat also increases the safety risks of
electric buses. Although the SZBG sustains
incident-free operations, the very early stage
of electrification had encountered a few
incidents where batteries had caught on fire
due to extreme heat or external force. At
temperatures greater than 50°C, the battery
discharge capacity would gradually go down
and the battery, without adequate cooling
mechanisms, runs the risk of catching fire.
High temperatures together with the heat of
battery charging can cause problems of
overcharging and thus affect the lifespan of
the battery. Manufactures are implementing
more stringent tests on batteries to minimize
risks of it catching fire.
Figure 4-1 Electricity consumption of SZBG buses and climate in Shenzhen in 2019
Acquiring and Managing an Electric Vehicle Fleet 41
SZBG Bus Fleet
0
40
Jan
80
120
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
0
100
200
300
400
89.63 86.08
91.81
16.7 23.4
28.5 29.3 25.8
17.6
19.45
16.1
26.6
47.2
69.1
65.6
35.4
153.4
231.3
304.5
317.3 353.3
26.55 29.15 28.15 21.85
26.7
258.9
96.97 98.13
106.55 107.99 107.44 106.39
99.97
94.81
89.68
Avg precipitation (mm)Avg temperature (oC)Avg electricity consumption (kWh/100km)
42 Acquiring and Managing an Electric Vehicle Fleet
The summer in Shenzhen can be hot with
frequent rainfalls, storms and even typhoons
that average about 193.3 centimeters of
precipitation annually. Urban flooding and
wading due to heavy rainfall could also impact
the operational safety of electric buses. Risks
of electricity leakage during flooding had
caused batteries to submerge in rainwater. To
deal with it, the SZBG regulates that if any
sections of road are submerged by 15 centi-
meters or more of rainwater, electric buses
would need to detour the service to other
roads.
Topography: Shenzhen’s topography is
primarily flat with some hills—most road
networks do not have steep gradients. The
survey to BYD indicated that even with
steeper gradients, different engines could be
selected to accommodate the topography.
Bus routes: The SZBG operated 327 bus
routes in 2015 before its large-scale electrifi-
cation, with nearly 5,000 diesel buses and 101
electric buses. The bus routes ranged from
several kilometers to more than 50 kilometers
long, with an average route length of 20.2
kilometers and a running distance of 229
kilometers per day per bus. The running
distance requirement and the locations of
charging stations—availability of space in
terminals and depots—were important input
for the procurement of buses and charging
facilities.
4.1.2 Selection of bus
model
Multiple factors influence the choice of the
right bus model including average daily
running mileage, ridership, weather condition,
road condition, and the ease of adoption. The
first step was to select small capacity or large
capacity battery of the buses (Table 4-1).
Table 4-1 Pros and cons of two electric bus types
Large capacity electric bus
Longer running distance: Existing
models of electric bus can support
200–500 km with full battery
Easier for adoption: Running distance
comparable to diesel bus and the
daily running mileage allow electric
bus to replace diesel bus without
significant re-routing
Interchangeable: Electric bus ready to
run any route if needed and supply
increased demands from other routes
easily
Less reliance on the locations of
charging facilities
Heavier: A 10.5-m long electric bus is
about 15% heavier than a diesel bus
Longer charging time: Based on
charging facilities and battery, the
charging time with high-power DC
charging takes about 2 or 3 hours
More expensive: Battery costs 40% of
the total price of 10.5-m electric bus
Small capacity electric bus
Lighter: Although most urban roads
designed to accommodate heavier
freight trucks too
More Affordable: battery costs less
Short charging time: Typically, a
10–15-minute charging at terminal
could run a roundtrip
Shorter running distance:
Heavy reliance on coordination
with charging facilities. Electric bus
needs to be charged after several
routes, which requires charging
available at the right place; therefore,
careful adoption on different route
Pros
Cons
Acquiring and Managing an Electric Vehicle Fleet 43
After considering these factors, the SZBG
decided to adopt the large capacity electric
bus model with daily running distances
comparable to their traditional diesel buses so
that minimal changes to existing bus routes
and schedules were needed.
BYD K9 and WZL A10 were two of the earliest
bus models launched by the SZBG in
2011–2013. Initially, owing to low battery
energy intensity, fewer passenger seats, and
battery depreciation, both models suffered
service issues and were used on shorter or
less frequent routes. The battery range on the
ground was about 180 kilometers or even less
and was unreliable as its state of charge
(SOC) dropped frequently. Thus, frequent
maintenance was needed because of
malfunctions or breakdowns. In 2011, two
electric buses had to replace one diesel bus to
maintain the same level of service.
Model BYD K8, procured in 2016–17, is an
upgraded model of K9 based on feedbacks
and suggestions from the SZBG after deploy-
ing K9 for a period. BYD K8 is smaller in size
but can carry 87 passengers, which almost
doubles the passenger capacity of the K9
model. Therefore, not only the battery energy
density was improved, the size of the battery
is also smaller on K8. Further, the battery
packs were also reorganized to sit under the
cabinet of K8. As a result, passenger capacity
expanded in K8. BYD K8, as the dominant
model, operates on the main bus routes. The
NJGD bus models, procured in 2016–17, are
smaller buses that operate primarily on branch
routes.
The electric bus fleet in the SZBG dominantly
features a single, reliable vehicle model–BYD
K8, which is 10.5 meters long with about 250
kilometers running distance under ideal
conditions. With DC fast charging facility, this
model can be fully charged in about two or
three hours with proper technical require-
ments under the safety instruction for hot
weather and water protection for batteries.
With minor adjustment of bus scheduling, one
electric bus model procured in 2015–17 could
replace one traditional diesel bus in the bus
fleet. The average daily operation distance for
the 10.5-meter electric buses in Shenzhen in
2019 was 190 kilometers; electric buses could
run a whole day and only needed recharging
at night on most routes.Technology improve-
ments have given bus operators more options
to suit their operational requirements. Bus
performance in running distance and malfunc-
tion rate caught up quickly with the high-pow-
er-density batteries and more mature electric
engine and control systems (table 4-2).
Table 4-2 Key performance parameters compared
Length (m)
Nominal battery
capacity (kwh)
Advertised running
distance with full
tank or battery (km)
Running distance
in real life (km)
Energy efficiency
(/100 km)
Battery-system
energy density
(Wh/kg)
Conventional
diesel bus
10.5
/
500
About 400
33 liters
/
Electric bus
procured in
2011–15
(BYD K9)
12
324
250
180 or less
140 kWh
90
Electric bus
procured in
2015–17
(BYD K8)
10.5
292
250
About 200
100 kWh
110
Latest electric
bus procured
(BYD K8S)
10.5
330
400
About 330
70 kWh
140
4.2 Acquiring the Vehicles
4.2.1 Procurement Process
While the financial leasing company owns the electric buses for their eight-year lifecycle, the actual
user, the SZBG, bears the responsibility of procurement to acquire high-quality products at competi-
tive prices. In the whole-vehicle lease model, the SZBG procures the buses through a process of
eight steps (figure 4-2).
44 Acquiring and Managing an Electric Vehicle Fleet
Figure 4-2 SZBG procures electric vehicles in eight steps
Since SZGB is an SOE, the Shenzhen
municipal government requires these procure-
ments to be implemented via public bidding.
The bidding is organized by Shenzhen
International Tendering Company Limited, a
state-owned tendering company responsible
for public tenders in Shenzhen. Shenzhen
International Tendering Company Limited,
together with some representatives from the
SZBG, select the evaluators from an expert
pool. The evaluators formed the bid evaluation
committee that evaluates the bids based on a
combination of scores for technical specifica-
tions, offered price and warranties, and
services provided. After the manufacturer is
selected, the SZBG would send their own
technicians to the manufacturing plants to
ensure vehicles are made to the operation
standard, and acquire knowledge of mainte-
nance and repair. After every batch of vehicle
is delivered, the SZBG technicians then would
perform a thorough inspection of the vehicles
before concluding the whole procurement
process.
Acquiring and Managing an Electric Vehicle Fleet 45
1. Analyzing the need of bus fleets
2. Conduct market research
3. Determine technical specifications
4. Consult with vehicle manufactures
5. Invite bidding
6. Evaluate bits submitted
7. Deploy technicians to the contract winning manufacturer
8. Accept vehicles
The SZBG implemented most of its bus
procurement during 2015–17, acquiring 1,600
buses in 2015, 3,573 buses in 2016, and 355
buses in 2017. Since the purchase subsidies
were paid directly from the government to the
vehicle manufacturers and only depended on
technical parameters such as size and range
that did not vary among manufacturers, the
bus purchase prices in subsequent discus-
sions did not include government subsidy
amount. Several different models of electric
buses were procured via open bidding, on
average saving 20 percent and 11.3 percent
from estimated costs after bidding and
contract negotiation respectively. While more
than 70 different electric bus manufacturers
operate in China, they usually participate in
biddings in provinces where they have a local
presence. In the latest bidding process from
the SZBG, only two manufacturers—NJGD
and BYD—participated (table 4-3, table 4-4,
table 4-5).
Table 4-3 SZBG bus procurement results in 2015
Vehicle type
180 pure electric
bus (10.5 m)
420 pure electric
bus (10.5 m)
1,000 pure electric
bus (10.5 m)
Number
180
420
1,000
Winning
manufacturer
BYD
BYD
BYD
Cost
estimate
per bus
(million yuan)
0.90
0.90
0.81
Subsidies received
per bus by
manufacturers
(million yuan)
1
1
1
Winning price
per bus (SZBG
paid to manufacturers)
(million yuan)
0.81
0.73
0.58
Source: SZBG
Note: The winning price is the price after government subsidy.
46 Acquiring and Managing an Electric Vehicle Fleet
Table 4-4 SZBG bus procurement results in 2016
Number
33
967
2,390
153
30
Winning
manufacturer
BYD
NJGD
BYD
BYD
BYD
Cost estimate
per bus after
subsidies
(million yuan)
0.40
0.40
0.73
0.73
1.30
Subsidies received
per bus by
manufacturers
(million yuan)
0.6
0.8
1
1
1
Winning price
per bus (SZBG
paid to manufacturers)
(million yuan)
0.24
0.319
0.58
0.58
1.26
Vehicle type
7 m bus
8 m bus
10.5 m bus
High floor bus
Double decker
Source: SZBG
Note: The winning price is the price after government subsidy.
Table 4-5 SZBG bus procurement results in 2017
Subject matter
10.5m High
floor bus
10.5m Double
decker
8m bus
Number
250
40
65
Winning
manufacturer
BYD
BYD
NJGD
Cost estimate
per bus after
subsidies
(million yuan)
1.05
1.8
0.7
Subsidies received
per bus by
manufacturers
(million yuan)
0.45
0.45
0.3
Winning price
per bus (SZBG
paid to manufacturers)
(million yuan)
0.93
1.66
0.592
Source: SZBG
Note: The winning price is the price after government subsidy.
Acquiring and Managing an Electric Vehicle Fleet 47
Buy-Back of Old Diesel Buses: As an SOE,
all buses owned by the SZBG are managed
by the state-owned asset committee. Per
government requirements, it is important that
the total value of state-owned assets be
handled properly. The SZBG and the vehicle
manufacturer negotiated that the winning
manufacturer would buy back the old diesel
bus fleets at a price of 5 percent of the
after-subsidy purchase price. Since BYD won
most of the bids, BYD bought back many of
the old diesel fleets based on their usage and
depreciation. Diesel buses in relatively good
condition that meet the local operation
standards could return to service other areas;
otherwise, they were decommissioned by
BYD via a locally registered vehicle decom-
missioning companies.
4.2.2 Technical
Specifications and Warranty
The technical specification of buses includes
vehicles, main parts, ancillary facilities and air
conditioning (figure 4-3). This section (4.2.2)
uses the largest batch of buses procured in
2017 as an example.
4.2.2.1 Vehicle Specification
The main vehicle specifications include size,
structure and dimension, power battery type
(conductive DC charging), minimum battery
capacity (varies from 115–250 kWh), and
C-rate2 (>=0.5C, SOC from 0%–100%). Also
included are the national and local technical,
safety, material, charging, communication,
battery and system requirements or
standards, and testing protocols that EVs
must comply with. The same model of buses
can have different specifications (table 4-6).
Table 4-6 Specification of bus model in SZBG
Sub-
Model
C8A
C8B
K8
K8S
K8S
C8
K8
Capacity
(kWh)
290.08
255.74
291.6
331.56
253.44
Voltage
(V)
518
473.6
540
614
422.4
Length
(mm)
10490
10490
10490
10200
10200
Width
(mm)
2500
2500
2500
2500
2500
Height
(mm)
3520
3520
3150
4200
4200
Power
Output
(kW)
180*2
180*2
90*2
100*2
100*2
Max.
Passengers
24–44
24–46
87
72
77
Model
Gross
Weight
(kg)
17500
17950
17800
18000
18000
48 Acquiring and Managing an Electric Vehicle Fleet
4.2.2.2 Main Parts and Ancillary Facilities
Power System: Technical specification and
warranty requirements for power battery
include specific requirements for cooling for
the hot and humid weather in Shenzhen.
Specifically, the drive motor and control
system has specific requirements for heat and
humidity resistance as with the electronic
control system of battery management system
(BMS), electronic control unit (ECU) and other
sensors, and an onboard monitoring unit.
Other parts include an air compressor, axle,
turning and braking systems, suspension, and
tire, etc. Manufacturer bidders who do not
meet these specifications will have points
deducted from their technical scores.
Ancillary Facilities refer to on-board GPS
and dispatching systems, smart card readers,
cash collectors, TV and media systems, and
Wi-fi.
Air Conditioning: Cooling capacity (e.g., >=
26,000 kcal/h for 10.5m buses) and energy
efficiency ratio (>=2.2)
3
are the most important
parameters.
Figure 4-3 K8 bus specifications
4.2.2.3 Warranty
Vehicle manufacturers provide various lengths
of warranty on batteries, electric motors, and
controllers or the 3-e system. At the bus-bat-
tery separation lease stage, the battery
warranty was only set for four years. At a later
stage, vehicle manufacturers provided eight
years of warranty on 3-e system for buses that
the SZBG purchased, and a lifetime warranty
on 3-e system for electric taxis with requiring
manufacturers come to the site within four
hours to resolve any malfunction. Smaller
repairs had to be resolved in six hours while
3-e systems faults had to be corrected within
48 hours. The warranty also requires the
manufacturers to replace batteries when the
state of charge (SOC) falls below 80 percent.
4.2.2.4 Vehicle Safety
To address the safety concern, the Technolo-
gy and New Energy Department and the
Procurement Department of SZBG have
developed specifications to ensure the safety
of the vehicle to be procured.
Acquiring and Managing an Electric Vehicle Fleet 49
1. Charging Hatch
2. Radiator Hatch
3. Rear Battery Compartment Hatch
4. Middle Passenger Door
5. Middle Right Battery Compartment
Hatch
6. Front Door Switch Botton Hatch
7. Front Passenger Door
8. Main Power Switch Hatch
9. Distribution Box Hatch
10. Middle left Front Battery Compartment
Hatch
11. Fuel Heating Hatch (vehicles in the
south do not have)
12. Rear Hatch
13.Front Hatch
reduced through using structurally stronger
materials for the bus frame, which provided
more efficient wire position and bundling,
improved waterproof, dustproof, the rustproof
performance of chassis and body, and with
some oversight, flaws in the assembling
process correction. BYD, in turn, also benefit-
ed from the onsite manufacturing supervision
of the SZBG as it helped improve the design
and production process of buses.
After initial years of learning and operation,
the technical specification for batches
procured later witnessed the following trends.
• More coverage of the warranty, more
detailed description in the bidding documents,
and for a longer period: the warranty for the
key parts, mainly the 3-e system, had to be
provided for the entire life cycle.
• Higher standards in line with the
technology progress: for instance, higher
battery energy density, longer running
distance, faster charging speed, integrated
controllers, battery cooling methods—that is,
shift from air- to liquid-cooled battery system
as an effort to prolong battery life—and
electronics protection standard. These
improvements aligned with the continuously
updated technical requirements for receiving
subsidies from national and local govern-
ments.
• More ancillary facilities were included
to provide more smart services such as
accessibility facilities, a voice guidance
system for the blind, smart monitoring device,
and driver zone barriers.
The SZBG requires manufacturers to meet a
set of high safety standards for battery packs.
These standards include a protection level
that is no less than IP67—which represents a
high water and dustproof battery pack—and
satisfactory operation safety in extreme
temperatures ranging from minus 20°C to
65°C. Besides the safety standards applied to
the battery packs, the SZBG established an
additional set of requirements on signal
interference, insulation, and convenience of
repair and maintenance for motor and control
systems. Subsequently, the manufacturing
procedure and material used, overall structur-
al integrity, proper protection of the wiring and
parts and the flame resistance performance
were set to the highest acceptable standards
for the vehicle’s chassis. Manufacturers were
also required to build in automatic fire extin-
guishing devices to protect passengers and
drivers in case of fire incidents.
4.2.2.5 Onsite manufacturing supervision
An advantage the SZBG had was co-location
with one of the leading electric bus manufac-
turers, Build Your Dreams Company (BYD).
After BYD won the bids, the SZBG formed a
manufacturing supervision expert team, and
sent technicians to BYD’s plant for onsite
supervision and training. These technicians
not only accumulated skills in maintenance,
repair and troubleshooting of the newly
procured vehicles, they also monitored and
provided valuable suggestions to the manu-
facturer about technical specification, selec-
tion of materials, production process, location,
and composition of parts. The SZBG sent
more than 100 technicians providing 875
suggestions, 761 of which BYD incorporated
on its electric bus design for the batch of
3,573 buses in 2016. The SZBG sent approxi-
mately 30 technicians who provided 359
suggestions, 277 of which were incorporated
for the batch of 355 buses in 2017. As a
result, the quality of the buses was improved
and maintenance and repair needs were
50 Acquiring and Managing an Electric Vehicle Fleet
Acquiring and Managing an Electric Vehicle Fleet 51
4.2.3 Electric Taxi Fleet Procurement
Taxi procurement went through similar processes as buses in accordance with SZBG’s company
rules. Manufacturers also bought back and decommissioned replaced internal combustion engine
(ICE) taxis. National and local governments provided purchase subsidies—44,000 yuan per vehicle
from the national government and 22,000 yuan per vehicle from the Shenzhen government—which
rendered the out-of-pocket procurement price of electric taxis comparable to the traditional taxis.
Similar to the practice employed for electric buses during the manufacturing stage, each subsidiary
taxi company sent its technicians to the manufacturer’s plants to learn about its maintenance and to
oversee the manufacturing process of the electric taxi. SZBG’s dominant electric taxi model is the
BYD e6 (table 4-7).
The SZBG has several key technical requirements on the major parts of the vehicle: reliability of
battery life for power battery to reduce the need to change battery in the five-year lifecycle of the taxi;
the energy density to reduce the battery weight and to increase distance per charge; the safety
feature; and the charging frequency and charging speed. The motor and control system specifies the
component size and weight, reliability, energy efficiency, noise and vibration control, speed range, and
torque.
Table 4-7 BYD e6 key specifications
Dimension (mm)
Weight (kg)
Battery Capacity (kWh)
Mileage (km)
Passenger Capacity
4560 (Length), 1822 (Width), 1630 (Height)
2175
82
300
5
52 Acquiring and Managing an Electric Vehicle Fleet
4.3 Operating
Electric Buses
The SZBG undertook several measures to
overcome the challenges of its operations.
These measures included refining the opera-
tional plan and scheduling for each line,
optimizing charging arrangement, and the use
of intelligent bus dispatch and management
systems. The adoption of the large capacity
electric bus made these measures relatively
easier to implement. However, the SZBG has
been making constant route adjustment and
optimization—routine and ad hoc. While the
routine optimization occurs twice a year, the
ad hoc optimization gets implemented as the
road condition and passenger’s demands
change. The SZBG deployed smaller batches
of electric buses at the very beginning of the
electrification process using a learning-by-do-
ing approach. Some routes were divided in
half and moved under the management of
different fleets, and some bus stops were
rearranged. With better technology (see the
evolution of bus technical specifications in
table 4-2 and table 4-6) and accumulated
experience, the SZBG could eventually
manage to operate the same number of buses
in service while maintaining service.
4.3.1 Operation Plan
Adjustment
The SZBG has more than 300 routes in daily
operation. It conducts regular performance
and efficiency checks of each route every six
months and makes appropriate refinements
depending on the running distance, shifts, and
charging time.
• Ensuring bus frequency to meet the
demand: SZBG collects passenger-flow data
thrice a month of workdays, weekends, and
holidays to optimize scheduling based on
actual demand.
• Routing adjustment to new metro
routes: With the development of Shenzhen’s
metro service, the function of the urban
electric bus changed from backbone to a more
feeder role to complement the metro service.
Some longer bus routes were shortened to
provide feeder-line services.
• Emergency response plans: Each
fleet or route has an emergency response
plan for any extreme weather, electricity
offcuts at charging stations, accidents, sudden
driver shortage, and holiday passenger surges
to ensure that bus services remain at an
acceptable level.
• Charging arrangement for electric
bus: Typically, three types of shifts for bus
lines in SZBG:
- Morning shift (early morning to early
afternoon)
- Afternoon shift (early afternoon to late
night)
- One-day shift (morning to night)
The typical charging arrangements for electric
buses are:
- All electric buses receiving
full-charging at night (23:00 – 7:00 hours)
- In most cases, those morning shift
and afternoon shift can run for the whole shift
- The one-day shift would need a quick
charge during the daytime up to the SOC
needed to finish the day’s operation (fully
charged at night)
Operational needs and electricity prices at the
different times of day dictated charging
arrangements (figure 4-4).
Figure 4-4 The philosophy of charging arrangement to minimize the electricity costs
Figure 4-5
Charging terminal with one plug (left)
and charging terminal with four plugs (right)
For example, bus terminal Xiangmei Bei in
Shenzhen has 17 charging terminals each of
150 kilowatts. The charging speed depends
As all electric buses are scheduled for full
charging during nighttime (23:00–7:00 hours),
charging facilities, and different shifts for
charging need to be carefully designed to
accommodate the large charging demands at
night. Traditionally, one DC charging terminal
has one charging plug to charge one electric
bus (figure 4-5 left). But to maximize the
number of electric buses charged at the same
time, SZBG negotiated with the charging
service companies to modify some of the
charging terminals with four plugs (network
charging as discussed in section 5.2; see
figure 4-5 right). Each charging terminal’s
output is fixed, therefore each charging plug
charges at quarter of the power to each bus
when all four plugs are used simultaneously
for charging. Although lower power requires a
longer time to charge, this arrangement has
the benefit that it does not require moving
electric buses at nighttime.
Acquiring and Managing an Electric Vehicle Fleet 53
Regular Operation Period
Peak Electricity Period
Peak Operation Period
Regular Electricity Price Period
Low Electricity Price Period
7:00
-9:00
9:00-
11:30
11:30-
14:00
14:00-
16:30
16:30-
19:00 19:00-
21:00
21:00-
23:00
23:00
-7:00
19:00
-7:00
9:00-
17:00
7:00
-9:00
17:00-
19:00
on the power of the charging terminal and the
specifications of the battery. One-to-one
charging is provided to the first batch of 17
buses for the first round of overnight charging.
With the remaining state of charge and a
150-kilowatt charging terminal, charging
usually takes one to two hours. The second
batch of buses receives a one-to-four capaci-
ty, so that 17 charging terminals can charge
up to 68 buses at the same time. With each
charging plug of about 40 kilowatts, the
charging usually takes six hours.
Each bus carries a charging guidance card to
ensure that drivers know when and where to
charge (figure 4-6). The SZBG tries to keep
the number of electric buses to be charged
during the daytime to a minimum to lower the
cost of electricity. Therefore, bus route
operators design their scheduling and
charging arrangements to lower the percent-
age of daytime charging. The SZBG provides
incentives, such as a bonus to bus route
operators, if the percentage of daytime
charging is lower than the benchmark.
Bonuses are paid to the fleet management as
part of their salary.
Figure 4-6
Charging guidance card on board of Line 38
Note: The card provides detailed information on the
current SOC of the bus battery (80%), charging time
(overnight charging with no supplementary charging in the
daytime), charging location (Xiangmei Bei) for one bus
under Bus line No.38.
4.3.2 Upgraded Bus
Management System
Electrification works concurrently with informa-
tion and technology as a lot of real time data
from the vehicles and charging facilities can
be collected and managed. With the electrifi-
cation, the SZBG upgraded its bus dispatch
and management system to support efficient
and safe operations of electric bus fleets.
Upgrades included the following three
modules:
• Dispatching module: to account for
electric bus running duration and charging
needs.
• Battery monitoring module: added by
collecting battery real time data from each
electric bus’s control area network (CAN).
• Charging terminal monitoring and
charging arrangement module: to collect real
time information of each charging terminal.
After the upgrade, real time battery data of all
electric buses under the SZBG are integrated
into the Intelligent Transportation Center (ITC)
and are used to improve operational efficien-
cy. The ITC integrates three main manage-
ment systems: bus operation management
system; safety management system; and
repair and charging management system.
With charging terminal information integrated
with a bus management system, dispatchers
can give specific commands on charging and
parking to drivers. This reduces drivers’
anxiety about remaining battery power and
their unnecessary runs to charging stations.
54 Acquiring and Managing an Electric Vehicle Fleet
Acquiring and Managing an Electric Vehicle Fleet 55
The bus operation management system
analyzes traffic patterns and service perfor-
mance in real time (figure 4-7). By collaborat-
ing with the ride-hailing company Didi Chux-
ing, a large amount of real time traffic data
from Didi Chuxing is available to help forecast
traffic conditions. This information is sent to
the dispatching module and to the passenger
information boards at bus stops to show the
forecasted bus arrival time. Fleet managers
can obtain data including previous day’s
overall passenger heat map, route’s ridership,
fare income, real time vehicle movement as
well as real time streaming of onboard
cameras to make minor adjustments to the
dispatch headway or resolve potential safety
issues.
regulation. These data also help the SZBG
develop personalized training packages to
improve drivers’ skills and safety habits
further. The video data also help analyze the
fatigue level of drivers to lower safety risks,
via a module of the safety management
system. The system can either send out a
verbal alarm to the driver or to management
depending on the severity of the fatigue level
in real time so that proper action can be taken.
Selected vehicles in the SZBG fleet are also
testing the advanced driver assistant system
(ADAS) developed in 2019 to assist the driver
reduce or eliminate blind spots. At the depots,
the safety management system provides a
color-coded map to categorize the safety
requirement level of different functional areas
within the depot as well as real time video
footage of the depot (figure 4-8).
The safety management system of the ITC
has played a critical role in SZBG’s electric
bus operation. The SZBG worked with the
SMTC to collect and map all the historical
traffic accidents and violation, so that it can
dispatch its safety management personnel
and fleet management to perform an on-site
inspection of operation in the corresponding
area. For every bus route, the fleet manager
organizes a monthly service meeting to
update any changes in the locations with
potential safety hazards, and discusses
proper mitigation actions to be taken by
drivers. The data from the video monitoring
system installed inside and outside the bus
are collected to analyze passenger occupancy
and comfort level. The SZBG requires fleet
management to keep video footage for a
minimum of 14 days so that fleet management
can identify drivers’ violation of any safety
Figure 4-7 Display of the bus operation and dispatching platform in the ITC
Note: the left panel shows from top to down, left to right: performance score, on-time performance of dispatching, dispatching
ratio, fleet size, passenger distance, operating revenue; the middle panel shows the routes and buses in operation; the right
panel shows from top to down, left to right: daily cumulated number of buses in operation, total passenger trips, passenger
distance, and bus shifts by subsidiary companies, as well as the dispatching ratio and the list of headway abnormality at the far
right.
56 Acquiring and Managing an Electric Vehicle Fleet
Figure 4-8 Display of Safety Management System of the ITC
Note: the left panel shows basic information on a selected depot, including the layout of the depot. The middle panel shows the
safety risk ratings of the depots, with the red color highest and the green color lowest. The right panel shows the safety
facilities in the depot including security cameras, fire extinguishers, fire hydrants, etc. as well as the live feeds from the on-site
cameras to the far right.
The SZBG fully explored new mobility
solutions to provide customized public
transport services to the public and demon-
strated the collaboration of electric mobility
and smart mobility. The SZBG founded Didi
Youdian Technology Company in 2016, along
with Didi Business Service Company and
Shenzhen Beidou Application Technology
Research Institute. The SZBG plans to
expand its mobile application further to
integrate more urban mobility service to
create a mobility-as-a-service (MaaS)
platform.
4.3.3 Training of Bus
Drivers
The differences in driving patterns between
diesel bus and electric bus in the SZBG
include:
• Longer Braking Distance: Since the
electric bus is heavier because of the battery
packs, its braking distance is longer than that
of traditional diesel buses, increasing collision
risks.
• Electric Engine and Control: The
engine pedal of an electric bus is more
sensitive than a traditional pedal, which
requires gentler driving at departure.
• Safety Check by Drivers: Safety
checks are needed at the start of each shift.
The items and requirements to check for an
electric bus differ significantly from a diesel
bus.
Operational differences necessitated training
for existing bus drivers to be eligible to drive
electric buses. The Training Center of the
SZBG developed a set of courses for no less
than 72 hours and hands-on driving training
for all drivers at the beginning stage of
electrification, including requirements to pass
a driving test and a knowledge test.
1. Knowledge training: The course
covers content in EV technologies, operation
safety, safe driving behaviors, maintenance
guide and contingency management. The test
includes both theoretical and practical knowl-
edge. The drivers need to pass the test with a
minimum of 90 points out of 100.
2. Test-driving requirement: To assist
drivers transitioning from a traditional to an
electric bus, each driver needed at least 50
kilometers of empty-bus driving practicebefore
being eligible to operate an electric bus with
passengers. The whole training process was
supervised in a controlled environment and
recorded on videos.
3. Online platform for continuous
learning: The training center also developed a
self-paced online learning platform in 2018 for
drivers to take appropriate lessons or to follow
their interest. This platform offers more than
300 courses to all staff members.
4.4 Maintenance
and Asset
Management
4.4.1 Vehicle Maintenance
and Repair Need and Costs
Compared with conventional internal combus-
tion engine buses, electric buses in general
have fewer maintenance and repair needs.
• Power and Transmission System:
Electric motor, gear decelerating drive, and
motor controller of electric buses have a more
straightforward mechanical structure and
provide higher transmission efficiency.
• Drive and Brake System:
While the
frame and axle of electric buses do not vary
much from conventional buses, most electric
buses use air suspension systems, which are
lighter, more energy efficient, and less noisy
than leaf-spring suspension. The air suspen-
sion system is also superior in maintenance
and repair needs. Tire wear is more for
electric buses because of heavier weight.
Electric buses also use disc brakes that
require less maintenance work than drum
brakes.
• Air Conditioning and Others:
Inverter air conditioner—used to control the
efficiency of the compressor which can help
achieve 30 percent better energy efficiency
2
than regular air conditioner units—is fully
welded, therefore has fewer maintenance and
repair needs.
• Maintenance checks and repair
workload between electric and conventional
buses differ.
• Regular inspection, daily inspection,
and level I maintenance (every 4000–5000
km) remain the same, with increased empha-
sis on the safety inspection.
• Low maintenance need, including
level II maintenance (every 20,000 km) and
workshop repairs, is reduced especially on
mechanical defects. However, work on
electronic parts increases.
• Overhaul maintenance and
whole-component repairs mainly on engine
and body are significantly reduced for the
electric bus. The maintenance for the 3-e
system is covered by manufacturer warranty.
• Storage need is significantly reduced
as the type and stock of repair materials and
components are fewer.
Acquiring and Managing an Electric Vehicle Fleet 57
Figure 4-9 Number of defects of conventional and
electric buses per 1,000 vehicle kilometers running
Note: Data for electric buses are the average of the 10.5m BYD K8 procured in 2016, and the data on the later years are based
on reasonable assumption; data for conventional buses are the average of the 11m buses in SZBG’s fleet.
Electric buses had a higher defect rate in
year-one (figure 4-9) because of technical
modifications and adjustments made to the
vehicle model at the initial deployment stage.
About half of all the defects for electric buses
at the two year-two stage were on the 3-e
systems that were under manufacturer
warranty. Other repair issues include
compressor defects and battery degradation.
Data from one earlier batch of electric buses
(BYD K8) that the SZBG procured in 2016
show that the total maintenance and repair
costs for electric buses were much less than
those of conventional buses in the early years
(figure 4-10). Because the K8 model was
procured in 2015–16, only the first four years
of maintenance cost are available. The
maintenance cost of year five to eight were
assumed with 20 percent annual growth rate
from year four, because it is expected the
maintenance of chassis, bus bodies and other
parts of the electric bus in the later years will
cost more. 3-e system warranties from the
manufacturer also reduce SZBG’s mainte-
nance costs significantly. Diesel buses require
overhaul maintenance every four years,
targeting mainly diesel engine and transmis-
sions that incur a substantial cost. Although
the annual maintenance cost of tires of the
electric bus is about 30 percent more than
diesel bus on account of its weight, it is
estimated the total maintenance costs of the
electric bus lifetime are about 30–40 percent
of the traditional diesel bus.
58 Acquiring and Managing an Electric Vehicle Fleet
0.000
Year 1
Year 2
Conventional Bus
Electric Bus
0.050
0.100
0.150
0.200
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Data from one earlier batch of electric buses
(BYD K8) that the SZBG procured in 2016
show that the total maintenance and repair
costs for electric buses were much less than
those of conventional buses in the early years
(figure 4-10). Because the K8 model was
procured in 2015–16, only the first four years
of maintenance cost are available. The
maintenance cost of year five to eight were
assumed with a 20 percent annual growth rate
from year four, because it is expected the
maintenance of chassis, bus bodies and other
parts of the electric bus in the later years will
cost more. 3-e system warranties from the
manufacturer also reduce SZBG’s mainte-
nance costs significantly. Diesel buses require
overhaul maintenance every four years,
targeting mainly diesel engines and transmis-
sions that incur a substantial cost. Although
the annual maintenance cost of tires of the
electric bus is about 30 percent more than
diesel bus on account of its weight, it is
estimated the total maintenance costs of the
electric bus lifetime are about 30–40 percent
of the traditional diesel bus.
Figure 4-10 Cost comparison of maintenance and repair between SZBG’s diesel and electric buses
Note: Data for electric buses are the average of the 10.5m BYD K8 procured in 2016, with the maintenance data for the first four
years in reality and assumed costs from year 5 to 8 with a 20% annual growth rate to include further maintenance requests. Data
for diesel bus are the average of the 11m buses which was in SZBG’s fleet. The surge of the cost in year 4 represents the
overhaul maintenances on diesel engines and other key parts. Diesel buses are basically discarded in the eighth year, so no
sharp increase in maintenance costs at the end of the eighth year.
Acquiring and Managing an Electric Vehicle Fleet 59
0
Year 1
Year 2
Diesel Bus
Battery Electric Bus
40
80
120
160
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
200
177.38
Maintenance costs (thousand yuan per bus) with annual running distance at 66,000 km
20.91
4.19
31.35
12.08
33.07
13.99 15.44
35.97
19.11
37.36
22.94
38.28
27.52 35.6433.03
Battery
At initial stage of the electric bus deployment,
Shenzhen piloted the bus-battery separation
lease (车电分离). However, PGC which
purchased and managed the battery had not
specialized in handling batteries. Consequent-
ly, the poor battery quality supplied in the
initial batches led to PGC’s financial loss and
disrupted SZBG’s bus operation. Shortly after,
the SZBG moved battery ownership and
management to the vehicle manufacturers
who provided lifetime warranty with promise of
battery replacement when its capacity fell
below 80 percent. Some buses experienced
battery degradation as early as at their
50,000-kilometer mileage. In the SZBG, most
of the batteries on the BYD K8 model needed
to be replaced after 2–2.5 years; for other bus
models, the replacement cycle was about
3–4.5 years. Manufacturers would only
replace the battery after multiple repair
attempts. Also, manufacturers usually only
replace batteries partially, that is, some cells
of the battery pack each time, as long as the
refurbished battery meets the SOC require-
ment. It is fair to assume that on average, the
replacement cycle is four years that is, one
bus gets two battery packs in its lifetime.
China’s regulation requires EV manufacturers
to bear the responsibility of battery recycling
which is why the residual price of the battery
is considered zero for the operator. BYD takes
recycles old batteries as agreed with the
SZBG. According to BYD, the vehicle and
battery manufacturer developed a
cascade-utilization plan for power batteries
depending on their remaining capacity. Those
with relatively high capacity would be used for
storage after capacity optimization. Low
capacity batteries would be disassembled,
and the valuable metal being recycled. The
SZBG started the recycling of over 700 tons of
power batteries from its first batch of 200
retired electric buses in March 2020. The
SZBG and the PGC (the owner of the batter-
ies) are working with Shenzhen Recycle
Environmental Technology Company Limited
to conduct the cascade-utilization of these
batteries, designing products for energy
storage, telecommunication base station
power reserve, and solar PV lamps.
4.4.2 Maintenance and
Repair Technicians
The human resource and technical depart-
ments of the SZBG developed a maintenance
and repair technician staffing standards and
transformation plan at the beginning of the
electrification which is critical in facilitating
SZBG’s electrification transition. They
assessed staffing requirements for different
types of technicians based on detailed
analysis of staffing and new requirements of
workloads and skill levels. They developed a
step-by-step staff transformation plan—train-
ing, re-assignment, incentives, talent attribu-
tion and compensation—for each team in
each maintenance and repair workshop,
considering the difficulty of transformation
based on specialty, age, and experience.
To illustrate, one high-maintenance workshop
at Caopu in Shenzhen was considered the
most difficult one to adapt as it focused on
highly specialized and streamlined engine and
body repairs and work. The SZBG worked
with BYD and turned Caopu Workshop into a
BYD electric vehicle service center, providing
3-e-system component maintenance and
repairs, body repairs, and warranty services to
the SZBG and other bus companies in
Shenzhen. The total number of maintenance
technicians has decreased slightly, with the
frontline maintenance technician to bus ratio
including workshop management went down
from 0.37 in 2016 to 0.30 in 2018.
60 Acquiring and Managing an Electric Vehicle Fleet
Acquiring and Managing an Electric Vehicle Fleet 61
Table 4-8 Maintenance and repair staffing transformation plan after the electrification
Specialty
Electromechanical technician
Mechanical technician
Electrician
Spray painter and panel beater
Others
Target
Staffing
619
709
152
188
0
Old Staffing
0
1286
174
249
56
Difference
619
-577
-22
-61
-56
After electrification of the fleet, only 55 percent
of the original labor force of mechanical
technicians was needed, while a large number
of electromechanical technicians had to be
added (table 4-8). The SZBG practiced an
elite and mass training approach in transform-
ing the skill sets of technicians to electrome-
chanical technicians.
• Training by electric bus manufacturer:
SZBG’s technical department has sent over
several batches of maintenance technicians to
BYD, the bus manufacturer’s plant, for onsite
training since January 2016. These elite
maintenance technicians, numbering 128
accumulated maintenance, repair, and
troubleshooting skills on the newly procured
vehicles including the 3-e system. They also
provided valuable suggestions to the manu-
facturer on the design of the buses.
• Training by vocational school support-
ed by the SZBG: The affiliated technical
training school provided specialized training
course and the course was largely subsidized
by the SZBG. Among the 1800 mechanics at
the SZBG, more than 1200 of those have
successfully acquired the electrician certifica-
tion to perform electric-bus maintenance as of
mid-2019. These transformations needed
several months of training, learning, and
certification to ensure a smooth and safe
transition to an electric bus fleet. The SZBG
also offered incentives and rewards if the
maintenance technician progressed to obtain
national skill level certificates such as EV
battery maintenance technician. The company
also hosted several internal technical competi-
tions for maintenance staff.
4.4.3 Toward Systematic
Asset Management
As a state-controlled joint venture, SZBG’s
assets are supervised directly by the
state-owned Assets Supervision and Adminis-
tration Commission of Shenzhen with the
main purpose of preventing loss or misuse of
state-owned assets. As a public service
provider that receives annual subsidies from
an affluent city government, asset manage-
ment of SZBG was limited to ensuring
operation and safety while having less
incentive of reducing lifecycle cost or asset
value appreciation. Inventory was limited to
meeting the demand of storage and repairs.
After the electrification, the SZBG placed a lot
of emphasis on charging and set up an
energy management system to be certified by
ISO 50001. While maintenance and repair
standards and procedures are set up to
minimize service disruptions and ensure
safety and environmental compliances, the
component of funding and valuation is
lagging. With its ambition to be the model in
electrification of public transport in the
country and the world demonstrating the
successful reform of SOE, the SZBG is
working toward systematic asset manage-
ment that incorporates a full-fledged asset
management plan and capital investment
planning.
62 Acquiring and Managing an Electric Vehicle Fleet
Figure 4-11 Digital display of depot and vehicle information in the ITC
a. Depot information b. Vehicle information
The digital management systems of the ITC
(figure 4-11) have established a solid founda-
tion for systematic asset management. The
platform monitors the occupancy level of
repair and maintenance workshops and
charging stations to schedule maintenance
and repair works. The depot management
system also tracks workshop workflow
including the time and other service
information of individual vehicles. With data
accumulated, the SZBG is planning to
provide all vehicles with predictive mainte-
nance service based on wearing status and
parts simulation as well as an online mainte-
nance manual that connects to the CAN.as
an online maintenance manual that connects
to the CAN.
4.5 Operating
and Managing
Electric Taxis
An electric taxi differs in its characteristics in
operation compared to traditional taxi vehicle
mainly because of its charging requirements.
At an early stage of electrification, a
three-hour nonoperating period was essential
in each shift, which included driving to the
charging station, a wait time of about an hour
at the charging station, and a charging time of
about 1.5 to 2 hours with DC fast charging.
The SZBG implemented numerous measures
to increase the operation efficiency and
viability of its electric taxi service.
4.5.1 Increase Double-Shift
Taxis
In Shenzhen, some taxis are operated by one
driver for a whole day—the single-shift
taxis—and some are operated by two drivers
on day and night shifts. After electrification,
the SZBG re-negotiated the contracting terms
with taxi drivers to increase the percentage of
double-shift taxis. While single-shift drivers
are less affected by charging need as they
need to rest during the full day, the
double-shift drivers for the SZBG could use
the electric taxi more efficiently, and lower
SZBG’s investment costs of vehicles as well
as the nonoperating time. With double-shifts,
drivers were required to charge their taxis fully
in between shifts at a charging station when
two drivers mutually agreed. The shift change
in Shenzhen usually occurred during
03:00–08:00 a.m. and 15:00–-20:00 p.m. At
an early stage when the charging stations
were insufficient and distance per charge was
shorter, taxis needed to charge at shift change
as well as during their shift. The taxi operator
arranged to stagger the charging schedule
assigned to drivers living in different zones
during their shift-changing time.
4.5.2 Maintenance and
Repairs
Technicians have been trained at the manu-
facturer’s plant about the maintenance of
electric taxis. After electric taxis were
deployed, all subsidiary taxi companies
continued their technical collaboration with the
manufacturer—inviting BYD’s technicians to
taxi workshops for learning advanced knowl-
edge and techniques as well as shared
learning sessions. The SZBG arranged annual
competitions among technicians and awarded
the most outstanding. The SZBG also focused
on compiling the experience accumulated by
these technicians and shared such experienc-
es as online courses to all its technicians.
With the joint venture with vehicle manufactur-
ers and trained technicians, the taxi mainte-
nance workshops of the SZBG were certified
to be able to provide maintenance and repair
services to other BYD e6 cars. Meanwhile,
BYD has also gained valuable data and
experiences from these maintenance and
repair works to improve the quality of vehicles.
4.5.3 Intelligent Charging
and Management System
The need of charging batteries has been a
major obstacle to operate any taxi efficiently.
Thus, improving the charging management
system has been critical to tackle this
challenge. The system monitors and analyzes
real time status of the vehicle—remaining
power and vehicle location—and the charging
terminal—queueing and pricing—and sends
charging reminders or suggestions to drivers,
and other relevant data to charging stations
Acquiring and Managing an Electric Vehicle Fleet 63
and taxi operators for improving the efficiency.
SZBG’s taxi subsidiary is developing an
integrated taxi management system. This
system plans to include more functions for
driver management: vehicle management
through defect alert; battery monitoring;
maintenance statistics and reminder; charging
and dispatching management including
troubleshooting and repair of charging termi-
nals; and maintenance management, schedul-
ing and status checking. The system can also
analyze facial expression of drivers during
operation to identify fatigue and send alarms
to alert tired drivers, and protect their safety.
4.5.4 Safety and Emergency
Response
Taxi drivers are the key to ensure safety. All
taxi subsidiaries of the SZBG have empha-
sized training for all drivers on the safe
operation of EVs including knowledge and
driving practice. PCET organizes monthly
safety study groups to discuss typical safety
cases, risks, and mitigation measures specific
to electric vehicles. The intelligent manage-
ment system also sends reminders and alerts
to drivers in real time, monitoring the GPS
data as well as camera feeds inside taxis.
Drivers’ performance and behaviors are
reported regularly and evaluated with financial
incentives. PCET also developed an emer-
gency response plan and conducts semi-an-
nual fire drills and evacuation drills for taxi
drivers.
Interviews of taxi drivers in Shenzhen,
conducted by this study, showed that while the
electric taxis are in general easier to drive with
better vehicle control—can go with empty
shift, can go closer to the curb—several major
traffic safety risks of the electric taxi fleet
persist. Such risks have contributed to the
increase of taxi accident rates in Shenzhen. i)
Vehicles are much heavier, so the braking
demands longer time and distance especially
when it rains. ii) Drivers report larger blind
spot of BYD e6 at the front and side of the car
because of a very wide A-pillar, or front pillar,
and a flatter windshield and a longer front
face. iii) It is quieter inside the vehicle—some
drivers are not aware of the speed, so speed-
ing occurs more often, and drivers seem to
get more fatigued on highways.
4.5.5 Leveraging Assets for
Revenue Generation
Taxi Hubs:
The SZBG further plans to
develop some of the taxi charging locations at
terminals, depots, and parking lots into
one-stop service complex with functions such
as public charging, maintenance and repairs,
car wash, convenience stores, entertainment,
psychological consultation as part of the
employee assistance program (EAP), apart-
ments, advertising, and logistics. Some of the
maintenance workshops with skilled techni-
cians could become authorized service
centers for other EVs.
Parcel Delivery:
With the advancement of
intelligent transport systems (ITS), SZBG’s
taxi fleet and other on-demand vehicles can
potentially move to other tasks during low
demand times or when on empty mileage. For
example, PCET launched a few initiatives to
offer more diverse services. For example,
PCET’s collaborates with a courier company
SF Express to use taxis to deliver small
packages within the city. In the trial period, SF
Express provided the software support and
orders, and PCET assigned about 1,000
electric taxis to provide small parcel delivery
services with minimal impact on operation
costs. This parcel delivery service turned out
to have generated significant income for
drivers, far exceeding earnings collected from
passengers during the COVID-19 outbreak
and recovery time.
64 Acquiring and Managing an Electric Vehicle Fleet
School Taxi:
PCET also started an internal
trial of a school taxi. PCET provided mobile
application-based service to transport school-
children. Their application (app) provides
parents real time video footage of the respec-
tive taxi as well as the location of the taxi,
indicating details for students’ departure and
arrival information on their way to school. All
of PCET’s taxis are equipped with panic
buttons that report to the respective police
department, and the guarantee of children’s
safety offered by this service makes it much
more attractive than a regular street-hail or
privately hired vehicle.
Traffic Police Support:
PCET is developing a
program that allows taxi drivers to help the
traffic police. Taxi drivers receive notifications
of nearby traffic regulation violations or crash
and can take photos at the violation of crash
sites when the police are absent and far to
reach. The taxi drivers who submit valid
photos are rewarded afterward.
Advertising:
PCET has also worked with
Meituan-Dianping, an e-commerce and food
delivery company, for local commercial
advertising and marketing campaigns using its
electric taxi fleet.
Driving Data:
The SZBG is considering
leveraging the large amount of data collected
by the fleet for revenue generation as a huge
asset. Driving data and vehicle diagnostics
are used as training datasets for autonomous
driving by large-scale manufacturers such as
SMIC and Ford. The SZBG also piloted
putting more sensors like the millimeter-wave
radar on buses to collect more data for such
purposes.
Acquiring and Managing an Electric Vehicle Fleet 65
Notes
1
According to research using data from various cities,
extreme low temperatures in winter impact the battery
charging time significantly. Statistics show that under
minus 25°C, charging time slows down by 38.9 percent
than that at 25°C. In addition, extreme low temperatures
raise challenges for the motor and heating system.
2
The C-rate is a measure of the rate at which a battery
is being charged or discharged. It is defined as the current
through the battery divided by the theoretical current draw
under which the battery would deliver its nominal rated
capacity in one hour.
3
Energy efficiency ratio (EER) for the air conditioner is
the number of British thermal units (BTU) the air condition-
er is pulling out per hour divided by watts of power
consumed. The higher the ratio is, the more efficient the
air conditioning unit.
Chapter 5
Acquiring and Managing
Charging Infrastructure
• Selection of optimum electric bus models based on climate, topography, existing
bus network and technology
• Training to drivers and maintenance staff key for operation; more electromechan-
ical technicians instead of traditional mechanists
• Electric bus routes and network should be continuously optimized on demand,
functionality and charging facilities
• The latest electric bus model supports continuous running for a whole day in
most urban scenarios, and supports 1:1 replacement of diesel buses during operation
• An intelligent bus management system is an important tool for successful
operation and asset management
5.1 Acquiring
Charging Infrastruc-
ture
The SZBG was a pioneer bus operator in
electrification. With the lack of technical
capacity—and therefore no charging operation
permit—at the beginning of the electrification
meant that the SZBG could not own or operate
the charging infrastructure initially. A charging
service provider owns the charging station and
the transformer, while the government owns
the power supply lines. This arrangement
turned out to be a common model in China,
and in a way, has nurtured a healthy and
competitive market for charging service
providers including grid companies.
The charging service provider performs two
main tasks:
• Constructing charging infrastructure,
including charging terminals, transformers, and
other charging related facilities.
• Providing charging services, which
include hiring technicians to perform daily
charging and maintenance service.
Selection of the charging service provider also
follows similar steps as with other procurement
of electric buses. The SZBG had 1,707
charging terminals at 104 locations for buses
by June 2019. The investment cost of a single
charging terminal ranges between 200,000
and 1,000,000 yuan. The cost includes the
devices of the charging terminal, the recon-
struction of the surrounding area, the trans-
former, the grid line expanded, and the land
ownership or lease. Apparently, for a large
charging station with many charging terminals,
such investments are significant. Costs of
financing costs and research and development
(R&D) also affect profitability (details in
chapter 6).
The charging facilities for electric buses
impose additional loads on the electricity grid.
A report by NRDC (Xiong et al. 2019) showed
that concentrated charging of electric vehicles
would additionally burden the regional electrici-
ty grid, and unmanaged charging activities
would magnify such burden. In the scenario of
unmanaged charging, the burden of China’s
national electricity grid would increase by
13.61 and 153 gigawatts in 2020 and 2030
respectively. Besides, the high-power needs of
charging facilities, especially fast charging,
would result in harmonic current（谐波电流）
and impulse voltage（冲击电压）challenging the
power grid corporation. All these projected
consequences would have to be considered in
the design and construction of charging
stations by a closer coordination with the local
grid authority.
Whether capacity of the power substation is
sufficient or whether a special power conduit
needs to be added or whether a transformer
substation capacity needs to be expanded, not
only makes up as much as one third of the
total investment cost, but also causes uncer-
tainties of approvals and delays by the power
supply bureau to approve any expansion. The
SZBG was fully aware of the potential impact
and expansion work on the electricity grid.
During the initial phase of electrification, the
SZBG collaborated with leading charging
companies on the market and coordinated with
the grid and authorities. Since the ownership
of private electric cars was still low in 2015,
such collaboration enabled opportunities to
generate stable revenues for charging compa-
nies and lowered the risks that SZBG faced in
capital investment, technology and coordina-
tion.
According to interviews with some large
charging operators, building and operating
charging stations for electric taxis are more
profitable—where investment breaks even in
about three years under the subsidy policy in
Shenzhen—than those for buses, whose
break-even time takes four to five years. This
is because taxi charging stations can also
provide services to private cars and other
Acquiring and Managing Charging Infrastructure 67
service vehicles. The revenue includes
government subsidies—at 0.6 yuan per
watt—and a service fee for charging. The bus
charging stations in Shenzhen are reserved
only for charging electric buses owing to safety
considerations.
Potevio Group Corporation and Shenzhen
Winline Technology (SWT) are the top two
charging station companies providing
infrastructure for the SZBG. PGC is the largest
charging station company and the earliest
player in providing charging facilities for
electric buses, taxis, light delivery trucks, and
other private EVs in China. As discussed
previously, PGC was not only the charging
facility provider but also the owner of the bus
batteries leased to the SZBG from 2009
through 2015. The SWT, established in 2007 in
Shenzhen, leads in producing charging
equipment with multiple charging outlets. PGC
is an SOE and was a critical actor during the
demonstration phase. The SWT on the other
hand, is a private company entering the
market at a later stage of large deployment.
Several other companies joined the market
after 2016 to develop charging infrastructure
with incentives provided by the Shenzhen
government; more than a dozen major compa-
nies operate charging stations throughout
Shenzhen.
The Challenge of Land Availability: After the
early deployment of electric buses and
construction of charging facilities at several
major bus depots, land availability in Shen-
zhen quickly became the biggest challenge.
Difficulty in finding lands with a clear title and
ownership meant much higher costs, long
delays, and other uncertainties for the
construction and operation of the charging
infrastructure. Although the SZBG transferred
the land acquisition risks—ownership right, the
potential of resettlement, land use changes,
lease disputes to mention a few—to the
charging service providers, the lagging
progress of charging stations on account of
land unavailability became the bottleneck in
the deployment of its electric bus fleet at the
initial stage. The SZBG piloted the network
charging concept of one charging terminal with
multiple charging plugs to save the need for
space at depots, as more space is required if
buses need to be moved for charging at night.
The land availability issue became even more
severe when the taxi fleet was electrified. The
Shenzhen government has made significant
efforts since 2018 to address the land avail-
ability issues to remove bottlenecks and
delays attendant on construction and opera-
tion of charging infrastructure.
i) Allocating the goal of charging station
construction for taxi fleet to each district
government to be accountable and monitor the
progress.
ii) Encouraging government agencies
such as Urban Management Bureau, Water
Supplies Bureau, and the New Development
District who have government-owned land
such as parks, parking lots, and water treat-
ment plants, to allocate land for charging
infrastructure.
iii) Relaxing and simplifying the land use
approval process for the construction of
charging infrastructure and its ancillary
facilities such as transformer room, rain
shelter, restroom, by assigning them as
temporary building and temporary land use
category; lowering the approval authority to
district level; and setting the compensation
standard to industrial benchmark land price for
temporary land use or short-term lease.
5.2 Technical
Specifications
The technical specifications for charging
infrastructure include requirements for
charging mode, power output, and monitoring
and management systems.
68 Acquiring and Managing Charging Infrastructure
The selection of charge mode was determined
by bus fleets charging needs, available
technology, and costs. The SZBG decided to
deploy DC fast charging stations with AC–DC
transformers installed in the charging station to
transform the AC from the city grid to
overcome two of the most prominent issues of
charging speed and the lack of space at
depots. Despite higher costs, compared to AC
slow charging mode with onboard transform-
ers, DC charging with the transformer built at
the bus depot or charging stations has three
advantages that the SZBG considers import-
ant. i) Reduction of potential malfunction spots
on the buses especially when technology is
still nascent—it is easier to inspect and fix
technical problems at the charging terminal
rather than on individual vehicles. ii) Power
output allowing faster charging speed, with
C-rate1 of 0.5, 40 percent faster than AC
charging (C-rate of 0.3), or more buses to be
charged in reasonable time. iii) More flexible in
location of charging terminals which can be
easily upgraded without the extra cost of
upgrading all individual buses.
Several alternative charging modes were also
considered, for example, battery swapping and
wireless charging. The SZBG did not select
the battery swapping option because of the
following factors: i) Since batteries by different
manufacturers use different standards, battery
swapping can only happen within the same
manufacturer or even the same vehicle model.
ii) Safety is still a big concern in swapping,
given the weight and size of the battery pack,
requiring redesign of the vehicle structure. iii)
The swapping needs additional working space
and the efficiency is still low, which is extreme-
ly costly and causes bad customer experience
especially in the urban core area where the
demand for battery swapping is high. iv)
Battery cost; battery swapping usually requires
50 percent of redundancy in battery, which
implies much higher costs. v) Unviable battery
ownership; the existing government subsidy
policy assumes one battery per vehicle—the
manufacturer cannot claim subsidy if it does
not own the battery, and the operator or user
does not have an incentive to swap their
battery because they might get an old battery.
Wireless charging has the advantage of
convenience and flexibility, but the existing
technology of wireless charging still cannot
compete in charging efficiency. Furthermore,
wireless charging would have much larger
impact on the grid than DC fast charging as it
requires an even larger power output due to
significant energy loss.
The power output of the charging terminals is
a major technical specification as the charging
speed depends heavily on it. The SZBG
piloted a network charging in 2016 with a
compact design of one charging terminal
equipped with several charging plugs to
handle four buses at the same time. Although
it takes longer time to charge, this arrange-
ment significantly reduced the need to move
buses at nighttime, which overcomes the
difficulty of moving buses within insufficient
space at depots and saves labor cost. For
example, at Ziweige Station, 63 buses can be
charged using five charging terminals without
moving any bus. A more flexible charging
concept was later introduced to adjust the
power output of each charging plug to achieve
the best efficiency and reduce.
The SZBG charging terminals allocate the
power output distribution (figure 5-1).The
majority of the charging terminals use 150
kilowatts (50%) and 180 kilowatts (19%) DC
fast chargers.
Acquiring and Managing Charging Infrastructure 69
Figure 5-1 SZBG charging terminals by power output
As technologies advanced, the SZBG required
charging terminals to have a modular design.
The modular design aided maintenance and
repairs as technicians could easily remove that
part to be replaced to minimize service
disruption. Typically, the charging service
providers require manufacturers to provide
more than two years of warranty of charging
facilities.
The charging monitoring and management
system needs to manage the payment, defects
of charging equipment and maintenance,
reporting, and to interface with dispatching,
operation, and other systems. One important
requirement is that the provider should share
all the data and information related to charging
with the SZBG, who also has the authority to
publish the data. All software is expected to
have lifetime warranty with free upgraded
services.
Technical Standard: The SZBG has devel-
oped a technical standard to convert traditional
bus terminals and depots to accommodate
charging, environmental and safety standards,
and monitoring procedures for both diesel and
electric vehicles, charging stations, and
depots. Although the workshop has less waste
water after the electrification from the elimina-
tion of oil change, it still has an increased
obligation to handle hazardous materials.
Technical standard compliance is important for
the large-scale construction of a charging
infrastructure. The Shenzhen government
urged the Shenzhen Power Supply Bureau to
develop technical standards to construct
charging stations, and the technical specifica-
tion of electric vehicle charging system was
formally implemented in 2015. In addition, the
Pengcheng electric taxi company under
SZBG’s control drafted another document
“Specification of Electric Taxi Charging and
Depot Facility” that was submitted to the Union
Internationale des Transports Publics (UITP)
standard committee in November 2019 as a
standard for international adoption. The final
approval of the specification standard was
pending at the publication of this report.
70 Acquiring and Managing Charging Infrastructure
45kw
60kw
100kw
120kw
150kw
160kw
180kw
240kw
Flexible
Power
Charging
Cabinet
220
93 96
851
17
329 282
14
5.3 Operating
Charging Facilities
Nine operators constructed and manage the
1,707 charging terminals that the SZBG has
for its buses. the PGC and SWT are the major
two operators which control the biggest
shares—35% and 33% respectively.
Malfunctions of charging facilities affect
charging, especially when the charging
terminal–bus ratio is low, and place reliance on
the service quality and response time of
charging operators. According to SZBG’s fleet
technical staff, large operators like the PGC
and SWT tend to have better service and
faster response. For example, the SWT
provides a 24-hour repair team. Some
charging providers store backup charging
modules onsite such as one backup module
per four charging terminal, and stock backup
parts in the local factory. The two largest
operators also use their staff or contractors to
charge the vehicles besides maintaining and
managing the charging facilities, monitoring
the charging and payment, and conducting
maintenance and battery testing. The opera-
tors’ charging staff are in general well trained
to minimize safety issues from mishandling.
The SZBG staff or bus drivers were permitted
to move the buses at night to charge in turn
when the charging terminal–bus ratio was low.
5.4 Taxi Charging
Infrastructure
At the first pilot in 2010, PCET relied on the
bus depots owned by the SZBG to construct
its first two charging stations and worked with
a charging service provider to ensure the
operation of its first 100 BYD e6. Later as the
shareholder of PCET, BYD joined forces to
construct more charging stations including
underground ones to meet the demand of later
deployment of electric taxis.
The charging infrastructure for electric taxis
has a unique challenge. Unlike BEBs which
return to a specific depot for overnight
charging, electric taxis need to offer 24-hour
service. An electric taxi depends on the facility
to charge at any close-by location when
needed. Instead of a large cluster of charging
infrastructure in one location, it became
imperative to have a large number of charging
facilities at widespread locations.
BYD e6 shares the same charging protocol as
other electric passenger cars. Thus, during the
electrification process, the SZBG actively
reached out to other business entities that
offered charging infrastructures at various
locations such as public parking lots, shopping
malls, and residential areas to open their
charging services for their electric taxis. The
SZBG launched its own business as a
charging service provider in 2018 and started
construction of some charging stations to
match the demands of electric taxis and other
electric passenger cars.
By the end of 2018, 11,571 charging terminals
were available for electric taxi charging in
Shenzhen. The charging terminal network
continues to expand with the growing need for
electric private cars.
Acquiring and Managing Charging Infrastructure 71
Notes
1
The C-rate is a measure of the rate at which a
battery is being charged or discharged. It is defined as the
current through the battery divided by the theoretical
current draw under which the battery would deliver its
nominal rated capacity in one hour.
References
1
Xiong, Y., Zhang, Y., et al. n.d. “Analysis on
Developing a Healthy Charging Service Market for EVs in
China”. Retrieved October 23, 2019, from http://nrdc.cn/in-
formation/informationinfo?id=204&cook=1
72 Acquiring and Managing Charging Infrastructure
Part II
Key Lessons:
Technology (im)maturity
At the early stages of electrification in China,
2009–2013, governments gave substantial
support to the automobile industry and their
related companies to develop China’s electric
vehicle industry, resulting in many new EV
manufacturers. The vehicles and the technolo-
gies were not widely tested, and the technical
specifications of vehicles varied among
manufacturers. Consequently, much uncertain-
ty and many risks persisted in the early
adoption of the electric bus. As technologies
developed some sophistication on battery,
electric engine, control system, and supply
chain integration, EVs improved significantly,
and market competition eliminated poor
performers. Basic EV standards were estab-
lished, but still many EV manufactures in the
market continued selling products of a range in
quality.
Bus operators, lacking technical knowledge or
capacity to evaluate different specifications of
vehicles, face higher risks in picking and using
(both vehicle and charging) technologies
during their lifecycles. It resulted in unsatisfac-
tory performances such as running distance,
malfunction rate, or charging speed to name a
few. For example, some early batch of buses
that SZBG had procured, experienced serious
battery degradation and a number of buses
had to stay in depot waiting for repairs for a
significant time.
Using pilots: SZBG procured about 100
electric buses for piloting during 2011–13.
Although the performance of those electric
buses was poor, the pilot allowed SZBG to
understand the technical characteristics and
requirements so that SZBG could improve its
business model, implement procurement,
Technical capacity: With the pilots, SZBG
had opportunities to engage the main stake-
holders in the EV ecosystem, including
government and industry policy makers,
manufacturers and researchers. The commu-
nication with the industry improved their
technical knowledge and capability to select
the right type of electric buses for its operation.
SZBG also established a technology R&D
department, whose major mandate was to
understand the latest EV and charging
technology and give recommendations to
management. SZBG invested significant
resources into capacity building and staff
training, for drivers, maintenance technicians,
as well as management and administrative
staff. Recruitment, vehicle manufacturer’s
plant onsite supervision, technical competition,
staff reporting card and bonus, certification,
and continuous and comprehensive training
are some leadership measures that have
reaped good dividends. It has been an impres-
sive achievement that SZBG has kept all its
labor force intact through the electrification
transition.
Close partner with manufacturer and
charging service provider: Through continu-
ous dialogue with the EV industry and market
research, SZBG had the ability to identify
robust manufacturers and to partner with them.
Over a ten-year period, SZBG and the manu-
facturers worked closely to keep improving the
technology and optimizing vehicle configura-
tions and quality based on operation feedback.
For example, SZBG has provided hundreds of
pieces of practical advice to EV manufacturers
via onsite supervision during manufacturing
stage that improved the quality of vehicles
SZBG procured. SZBG technicians also got
first-hand instructions from manufacturers on
how to use the vehicles to maximize efficiency
and prevent problems. For example, SZBG
incorporated the tips to maximize battery life
into the charging protocols for drivers and
charging service providers such as charging
fully before pulling the plug, charging no more
than twice of the battery capacity per day, and
performing passive battery balancing by
leaving low-SOC buses to discharge on
depots. The close partnership between
operators and manufacturers not only reduced
the technical risks of operators, but also led to
improvements in successive generations of
electric buses.
Extended manufacturer warranty: SZBG
required an extended warranty of eight years
for the key parts of electric bus to lower the
risks of immature technology. Because of this,
manufacturers are incentivized to provide the
best quality of electric buses to lower their
risks through the long duration of the warranty.
Developing standard: SZBG worked with
partners in developing the standardization of
adoption and operation of electric buses and
taxis. SZBG worked with Shenzhen Standard-
ization Research Institute in October 2019 and
developed noteworthy standards: “Manage-
ment specification of operation safety for
battery electric bus”; “Emergency treatment
specification of operation safety for battery
electric bus”; “Technical Specification for
Maintenance and Repair of Pure Electric
Taxis”; and the “Comprehensive Charging
Station Infrastructure Specification”. SZBG is
also a member of both the Bus Committee and
the Ride Hailing Committee of the Union
Internationale des Transports Publics (UITP),
an international organization of public transport
service provision. SZBG worked with UITP on
promoting its standards as international
standards.
Financing
The key challenge for electric bus adoption
around the world is the high capital cost in
comparison with the traditional diesel buses.
The price of the electric bus has dropped
significantly since 2009 because technology
evolves and economies of scale set in. The
price of the model BYD K8 procured in 2015
was 1,580,000 yuan per bus without subsidies;
and the similar model in the market costs only
800,000–900,000 yuan in 2019. Although the
price keeps dropping, the procurement price of
the electric bus is still twice the price of a
traditional diesel bus, especially of the
large-battery ones with acceptable running
distance.
The Chinese government started giving
purchase subsidies to incentivize the adoption
of EVs in 2009. The subsidies started to
decline since 2016, and it is planned that no
subsidies will be provided in the near future
(the complete phasing-out was postponed to
2022) to allow full market competition between
EVs and traditional vehicles. The phasing-out
of subsidies encouraged EV manufacturers to
improve their efficiency further and reduce the
cost of manufacturing and price. Charging
facilities are also part of the main costs for
electrification. Land acquisition or rent for
charging stations requires large amount of
initial investment for larger adoption.
Financial Leasing: SZBG actively negotiated
with manufacturers, financial agencies and
other industrial departments, and together they
developed innovative procurement solutions
(chapter 3). Financial leasing helped lower the
initial capital cost.
Taking Advantage of Subsidies: The pilots
and regular dialogue with the industry helped
SZBG better understand the EV development
and policy evolution, which allowed SZBG to
choose the optimum time for electrification.
When a relatively mature electric bus model
appeared in 2015, and subsidies were antici-
pated to decline, SZBG decided to take the full
advantage of subsidies from all levels of
government to lower the initial costs of electric
buses.
Collaboration with Charging Service
Providers: Charging facilities are also part of
the main cost and the technology risks. SZBG
chose to collaborate with the charging service
providers, who invest and operate charging
stations and services, to ease the initial
investment and technology risks.
Operations and Management
Shenzhen is a fast-growing city with expanding
urban areas and construction that lead to
changing travel demands and unpredictable
traffic conditions. The bus routes are subject to
change as the metro network expands. The
electric bus operation faces additional limita-
tions because of battery running distance and
lack of charging facilities. Land availability in
Shenzhen quickly became the biggest
challenge after early deployment of electric
buses and construction of charging facilities at
several major depots.
Large-battery bus: On account of very limited
depot space and scarce charging facilities
available, SZBG chose the large-battery
electric bus with long-running distance to
minimize the charging need and disruption to
operation. Large battery buses are also more
flexible to adapt to a changing demand and
operate under unpredictable traffic congestion.
The chosen model allows to leverage the
lower electricity price at night and maximizes
battery life due to fewer charging events.
Improve fleet operations: Every bus route
has a detailed bus scheduling with detailed
considerations on different bus arrangements,
charging arrangements and emergency
response procedures to ensure that the route
adapts to different situations. The scheduling
is refined every month after analyzing the
ridership and traffic data.
Operation-oriented charging mode: Realiz-
ing the scarcity of charging facilities and space
for new charging facilities as the main obsta-
cle, SZBG decided to stick with DC
fast-charging (as opposed to AC slow
charging, battery swapping, or wireless
charging) to ensure operational efficiency.
SZBG also explored and encouraged innova-
tions in network charging and flexible charging
cabinet to overcome the charging bottleneck.
Intelligent management systems: SZBG
relies increasingly on technology and data for
bus ridership analysis, dispatch optimization
and charging arrangements. SZBG also uses
mobile technology to provide customized
on-demand bus service.
3
Assessment of
Costs and Benefits
Chapter 6
Total Cost of Ownership
• The total cost of ownership (TCO) of BEBs without subsidies is about 21%
higher than diesel buses; the subsidies reduce the TCO of BEBs by 35%
• The purchase price of BEB without subsidy was nearly triple the price of diesel
bus in 2016 in Shenzhen; the price difference has since declined
• BEB’s energy and maintenance costs together are significantly lower (about
44%) than diesel bus over its lifetime
• TCO analysis if charging stations confirms that charging infrastructure is a
profitable business with charging service fees
6.1 Introduction
Electric vehicles have gained much attention
and are promoted by many countries, not only
for their emission reduction potential but also
because of operational cost savings. Breetz
and Salon (2018) analyzed the TCO of battery
electric vehicles (BEVs), hybrid electric
vehicles (HEVs), and internal combustion
vehicles (ICEVs) in 14 metropolitan cities and
found that the TCO of BEVs are still more
expensive, and concluded that government
subsidy was essential for BEV deployment.
Most literature find that the initial capital cost of
the EVs is higher, but the operational cost of
energy and maintenance is lower than that of
conventional fuel alternatives (Breetz and
Salon 2018; Wu et al. 2015). This chapter
investigates the TCO of electric buses using
actual financial and operational data from the
SZBG.
We estimated the TCO of bus operation,
covering the capital cost, maintenance cost,
energy cost, taxes and fees, which occur over
the lifetime of the BEB and DB. We also
conducted a sensitivity analysis to analyze
how much each of the variables investigated
would affect the TCO results, including a
Monte Carlo simulation to see combined
effects by changes of multiple variables.
6.2 Bus TCO
Our study developed a TCO model to compare
the cost of ownership between a BEB and a
comparable DB.
The municipal government set eight years as
the lifetime of heavy duty transit buses to
operate in Shenzhen to ensure reliability and
safety of the bus’s operation (table 6-1). In
other countries, the lifetime of 12 years is more
common for transit buses; and the effect of a
bus’s lifetime on TCO will be analyzed using
sensitivity analysis. The bus routes were
reorganized considering both BEB drive range
and extended metro network. Overall, the daily
driving distances were shortened and more
routes were reorganized to connect the
residents’ communities with metro stations.
For a TCO comparison of DB and BEB, we
calculated years between 2016 and 2024 for
analysis to set the same lifetime and annual
driving distance. The per kilometer energy and
maintenance costs of DB are based on earlier
experience data.
78 Total Cost of Ownership
Table 6-1 Basic setting of BEB and DB
Lifetime of ownership
Annual driving distance
Diesel bus
8 years
66,000 km
BEB
8 years
66,000 km
Table 6-2 BEB and diesel bus model configurations
Bus picture
Vehicle Model
Propulsion fuel
Length (m)
Width (m)
Height (m)
Curb weight (kg)
Gross vehicle weight (kg)
Total maximum passengers
or seats (including driver
and passengers)
a
CK6100LGEV2
Electricity
10.490
2.500
3.150
11700
18000
87/32
ZK6105HG1A
Diesel National VI standard
10.500
2.500
3.050
10300
16500
95/32
Source: www.chinabus.com
Note: Seat numbers of 87/32 mean 32 seats, with a total passenger capacity (including standing passengers) of 87.
6.2.2 Replacement Rate
If a single BEB can accomplish the driving task of a DB, the replacement rate should be one. The
earliest BEB models (BYD K9 and WZL A10) were only adopted on specific routes with a shorter
distance and not able to fully replace diesel bus trips. The estimated replacement rate for regular
routes was about 0.8 out of 1. SZBG’s existing BEB fleet, comprising mainly BYD K8s, is fully able to
cover all the routes. Through SZBG’s refined management and operation, the existing BEBs can
achieve a replacement rate of one, without the additional number of buses.
Total Cost of Ownership 79
6.2.1 Selection of Sample Buses
This study selected the BYD K8 (CK6100LGEV2) to represent the BEB model because it represents
66 percent of SZBG’s fleet after their shift to full electrification. This study selected the Yutong
10.5-meter diesel bus (ZK6105HG1A) as the comparable diesel bus model. The Yutong diesel bus
model was SZBG’s dominant model before electrification (table 6-2).
6.2.3 Bus TCO Model
The TCO model reveals all the costs related to ownership and operation over the lifetime of a bus. The
TCO equation 6-1 and equation 6-2 encapsulates our approach.
Equation 6-1
Equation 6-2
Where:
•TCO is the present value of the total cost of ownership for the ownership period
•Cost is the purchase cost, which can be paid one time at procurement or financed over
the lifetime of the bus, and includes procurement tax and registration fee
•ResidualValue is the resell price or scrappage value of the bus at the end of the ownership
period
•Cost includes the insurance and fees, electricity or fuel cost and annual maintenance
cost
•r is the annual discount rate
•T is the period of total ownership
Additionally, the Chinese national and local governments provide purchase subsidies to promote BEB
adoption. In this study, the subsidy is reflected in the capital cost by subtracting the allowance from
the market price.
The TCO model presented in this study only includes the direct costs associated with bus use and
ownership. The indirect costs such as deliberate scheduling efforts for BEB operation and charging,
labor costs of drivers, mechanists or technicians and refueling or recharging staff are excluded.
6.2.3.1 Capital Cost
As a big corporate client, the SZBG receives bulk purchase and enterprise discounts. The price (table
6-3) may not represent the market price for individuals or smaller bus buyers. Additionally, the nation-
al and local governments provided generous subsidies to bus manufacturers to promote the adoption
of electric buses. The results are presented with and without subsidies. The subsidy for electric
vehicles in China has been extended to 2022 (instead of ending in 2020) to alleviate the economic
impacts of the COVID-19 pandemic on the automotive industry. However, the fiscal subsidy will phase
out eventually, and where it does not exist in many other jurisdictions, the no-subsidy scenario is an
essential reference for other cities.
capital
operation_t
80 Total Cost of Ownership
Table 6-3 Bus price and subsidies
BYD-K8
Yutong diesel bus
Bulk procurement
contract price in 2016
(thousand yuan)
1580
508
National Subsidy
in 2016
(thousand yuan)
500
0
Shenzhen municipal
Subsidy in 2016
(thousand yuan)
500
0
The SZBG substituted most of the diesel buses, 5528 of them, , with BEBs in only two and a half years
during 2015–17. Procuring this large volume of BEBs put a tremendous financial burden on the
company. The SZBG worked with the financial leasing company and developed a leasing plan to
procure electric buses. The SZBG procured electric buses based on their demand and specification,
and the financial leasing company paid for the BEBs to the manufacturers. With the leasing plan, the
SZBG pays the lease quarterly to the financial leasing company with an annual interest of 4.16 percent
over the eight-year lifetime of the buses. We simplified the calculation by applying for the annual
payment at the end of each year to the financing leasing company and converted the annual payment
to present value with the discount rate. The capital cost for diesel bus is assumed with the same
financial plan and same interest and discount rate as of the electric buses.
6.2.3.2 Operation Cost
Energy Cost
The annual energy cost in each year is the cost of fuel or electricity consumption (equation 6-3).
Equation 6-3
EE is the energy efficiency of fuel or electricity consumption per kilometer. The diesel price has
fluctuated in the past years. We used the average bulk purchase price of diesel at 5.09 yuan per liter.
The energy cost of BEB consists of the price of electricity and charging service fee which varies
based on the time of the day (table 6-4). SZBG’s average charging ratio at peak, normal and valley
times was 12.5 percent, 24.1 percent, 63.4 percent respectively. Therefore, the weighted average
price of 0.8576 yuan per kilowatt hour is used for our base calculation (table 6-5). With the variation of
the electricity price of time of day and service fees, we set the range of energy cost of 0.6511 to
1.4476 yuan per kilowatt hour for the sensitivity analysis.
energy_t
Total Cost of Ownership 81
Table 6-4 Electricity Price Scheme
Peak
Normal
Valley
Time of Day
9:00-11:30, 14:00-
16:30, 19:00-21:00
7:00-9:00, 11:30-14:00,
16:30-19:00, 21:00-23:00
23:00-07:00
Hours
7
9
8
Industry Electricity
Price (yuan/kWh)
1.0516
0.6991
0.2551
Service Fee
(yuan/kWh)
0.396
0.396
0. 396
Total
(yuan/kWh)
1.4476
1.0951
0. 6511
Table 6-5 Weighted average price of electricity and diesel
Diesel (yuan/L)
5.09
Electricity (yuan/kWh)
0.8576
Energy efficiency varies with buses running on routes that differ in speed, acceleration, the slope of
the road, drivers’ driving habits, and other factors. The SZBG provides training and incentives for the
bus drivers, encouraging them to improve the energy efficiency for both BEBs and diesel buses (table
6-6). BEB’s energy consumption data in year one to four are based on the actual statistics from the
SZBG, and the later four years are estimated conservatively with a five percent annual growth
rate—considering the deterioration of electric motor and the gradually replaced battery cells.
Table 6-6 Diesel and electricity consumption efficiency
DB (L/100 km)
BEB (kWh/100 km)
Energy consumption
efficiency Year 1
37
94
Year 2
38
92
Year 3
38
98
Year 4
37
104
Year 5
38
109
Year 6
39
114
Year 7
38
120
Year 8
38
126
82 Total Cost of Ownership
Maintenance Cost
Over the eight years of a bus’s lifetime, diesel
buses undergo scheduled regular mainte-
nance every 20,000 kilometers to check the
status of the bus, repair or replace small parts,
fill up fluids, check and replace tires if needed,
fix wear-outs and prevent further malfunction.
In the fourth year of operation, diesel buses
receive overhaul maintenance to check the
engine, chassis and bus body, and more
thorough check and repair. Based on SZBG’s
statistics, the average maintenance cost of a
diesel bus is 0.779 yuan per kilometer.
The electric engine and transmission compo-
nents are far simpler in a BEB. Additionally, the
BEB technology has improved since the SZBG
adopted it in 2015, and as a result, the rate of
malfunction dropped substantially. With greater
confidence in their products, the BEB manu-
facturers provide lifetime warranty for BEBs’
3-e system. This has led to significantly lower
maintenance cost, labor cost, and on-campus
repairs compared to diesel buses. The mainte-
nance cost typically consists of tire replace-
ment cost, regular and advanced maintenance
costs.
Tire Replacement
The tire replacement cost for a diesel bus is
about 90 yuan per 1000 kilometers. Tire
replacements for BEBs are slightly higher at
125 yuan per 1000 kilometers for two reasons.
First, the total weight of the vehicle is higher
than the diesel bus. Second, BEB’s have
in-wheel electric motors playing a role in the
propulsion and braking process, which wear
down tires. As a result, the tire cost for the
BEB is about 38.8 percent higher for the
SZBG.
Regular Maintenance
During regular maintenance for diesel buses, a
maintenance crew performs a series of tasks
including an oil change, tire rotation,
transmission fluids refill, brake fluids refill as
well as checking or replacing a variety of
mechanical parts.
Maintenance for BEVs is substantially lower
because of the simplicity of the technology.
The most essential parts are the electron-
ics—the battery, the electric motor, and the
electronic controllers or the 3e system—which
are included in the manufacturer’s warranty
contract over the entire operating period of the
bus. Technicians from the SZBG estimate that
the regular maintenance cost has dropped
from about 600 yuan per 1000 kilometers for
diesel buses to 200 yuan per 1000 kilometers
for BEBs.
Overhaul Maintenance
Overhaul maintenance for the diesel buses is
scheduled at the end of the fourth year of each
bus’s operation. The process includes testing
and repairing the engine, air conditioner
compressors, and bus body. The tests also
cover: the braking system, usually replace-
ment of the oil seal; the transmission system,
replacing the clutch and drive shaft; the
electronic system, replacing the generator and
lighting lines; the power system; and the
malfunctioning parts of the steering system,
knuckle and booster. The overhaul mainte-
nance costs for a diesel bus are approximately
160,000 yuan on average, about 30 percent of
the capital cost.
The manufacturer provides a lifetime warranty
for the motor, battery, and electric control
systems for BEBs. The bus body also consists
of aluminum alloy instead of steel that does
not need to be replaced over its lifetime.
Therefore, BEBs do not require an overhaul
maintenance schedule. Based on data from
the SZBG, for the first four years of operation,
the maintenance cost of BEBs can be as low
as 17 percent of the diesel bus’s maintenance
cost. However, the maintenance cost increas-
es gradually in the next four years. Similar to
the energy efficiency data, we adopted the
Total Cost of Ownership 83
actual data of diesel buses and the first four
years for BEBs (table 6-7), and made a
conservative estimation for BEBs in years 4–8
with an increase rate of 20 percent. In the
sensitivity analysis, we adopted the 20 percent
and 100 percent of DB’s maintenance cost as
BEB’s maintenance cost as the boundary in
our Monte Carlo simulation analysis.
For all the electric buses in SZBG, the bus
manufactures take care of the three electrics
(electric motor, electric controller and battery)
over the agreed lifetime (eight years for
heavy-duty buses and five years for medi-
um-duty buses). The K8 models typically need
a battery change after 2-4 years of operation,
depending on the driving behavior, the route
characteristics, and the battery energy density
of different batch of products. However, as the
manufactures take care of the battery change
within the warranty, SZBG does not pay for
them and battery cost is excluded from the
maintenance cost analysis.
Table 6-7 Maintenance cost for diesel buses and BEBs
Diesel bus
BEB
Maintenance
Cost (yuan/1000 km) Year 2
476
152
Year 3
502
211
Year 4
2706
242
Year 5
546
290
Year 6
567
348
Year 7
581
418
Year 8
541
501
Year 1
318
75
6.2.3.3 Operation Subsidies
Transit bus operation relies heavily on the
municipal government subsidy for its opera-
tion. The Shenzhen Municipal Transportation
Commission (SMTC) provided SZBG 244,000
yuan per diesel bus per year of operation
subsidy. SMTC provides 422,700 yuan per
BEB each year of operation with annual
mileage of no less than 64,000 kilometers.
The operation subsidies for both DB and BEB
were used for overheads in SZBG. We
excluded the operation subsidies in our TCO
analysis.
6.2.3.4 Other Costs and Variables
Tax and Fees
With governmental incentive policies, the
purchase tax and other taxes are waived for
transit buses and for new energy vehicles
(NEVs). SZBG still pays mandatory liability
insurance of vehicle traffic accident of 3,140
yuan, commercial vehicle insurance of 2,100
yuan every year and operation fees 804 yuan
per bus. These taxes and fees are at the
same rate for BEBs and diesel buses.
Discount Rate
The typical adopted discount rate in literature
lies between 1 and 15 percent. To represent
the opportunity cost, we used the discount
rate of three percent for the baseline analysis.
We conducted a sensitivity analysis to
estimate the TCO change with a discount rate
between 1 and 7 percent (table 6-8).
84 Total Cost of Ownership
Residual Value
After their lifetime, buses are phased out from the fleet. Typically, the residual value of a diesel bus
and BEB is assumed as only worth five percent of the original purchase price.
Table 6-8 Variables and range adopted in TCO literature
Vehicle
Type
Passenger
Vehicle
(Breetz and
Salon, 2018)
(Palmer et
al. 2018)
(Nurhadi,
Borén, and
Ny 2014)
(Lajunen
and Lipman,
2016)
This study
Bus
Bus
PHEV,BEV,
ICEV
PHEV,BEV,
ICEV
BEB with
different
battery size
and charg-
ing speed
BEB, plug-
in hybrid bus,
CNG bus,
fuel-cell bus
BEB, diesel
bus
Data and
Methodology
Scenario
analysis
Simulation
Real practice
data
Region
14 states
in the U.S.
Japan, UK,
California,
and Texas
(U.S.)
Norway
California
(U.S.) and
Finland
Shenzhen,
China
7% for
baseline,
5%, 10%,
15% for
sensitivity
analysis
3.5-4% for
baseline, 2-
11% for
sensitivity
analysis
1%
4%
3% for
baseline,
1-7% for
sensitivity
analysis
Discount
Rate
Life year
analyzed
5
3
8
12
8
Annual
Distance
Varied on
average VMT
(Vehicle Miles
Traveled) of
the states
Varied on
regions,
range from
6,213 to
15,641
miles
93,000 km
None
66,000 km
Total Cost of Ownership 85
6.2.4 TCO results
Without purchase subsidy, the present value of lifetime total cost of BEB would be 2.17 million yuan,
21 percent higher than a diesel bus’s total cost of 1.80 million yuan. With government subsidy, the
total cost of BEB would be 1.17 million yuan, 35 percent less than that of a diesel bus (table 6-9 and
figure 6-1).
Table 6-9 Present value of diesel bus and battery electric bus
Capital (k Yuan)
Energy (k Yuan)
Maintenance (k Yuan)
Tax and fee (k Yuan)
Residual (k Yuan)
TCO Present value (k Yuan)
TCO per kilometer (Yuan/km)
TCO/km to Diesel bus
Figure 6-1 Value of the composition of the bus costs
529.13
885.76
357.74
42.11
-19.10
1795.64
3.40
100%
1645.73
418.30
123.01
42.11
-59.39
2169.75
4.11
121%
604.13
418.30
123.01
42.11
-21.80
1165.74
2.21
65%
DB BEB BEB_subsidy
86 Total Cost of Ownership
DB
-500
500
0
1500
1000
BEB_subsidy
BEB
2000
2500
TCO (thousand yuan)
Tax & Fees
Maintenance
Energy
Capital
Residual
Total Cost of Ownership 87
Table 6-10 TCO results compared with results from literature
Diesel bus
Electric bus with purchase
subsidy, without charger
Electric bus without purchase
subsidy, without charger
Diesel bus
Electric bus without charger
Electric bus with charger
Diesel bus
Electric bus without charger
Electric bus with charger
Electric bus 1 extra battery
and 1 normal charger
Hybrid bus
0.75
0.95
1.05
1.70
2.10
2.30
8.44
11.23
(€/mile)
(€/mile)
(€/mile)
($/mile)
($/mile)
($/mile)
(SKr/km)
(SKr/km)
3.40
2.21
4.11
9.34
11.83
13.07
19.04
23.52
25.76
11.56
15.39
This study,
2020
Lajunen and
Lipman, 2016
Nurhadi et al.,
2014
Finland
cycle
USA_CA
cycle
(¥/km)
(¥/km)
(¥/km)
(¥/km)
(¥/km)
(¥/km)
(¥/km)
(¥/km)
(¥/km)
(¥/km)
(¥/km)
Studies Bus Setting Original Results Transformed Results
Note: Different currencies represented reflect the region of the referenced studies: €- Euro; $ - USD; SKr – Swedish Kroner; ¥ -
yuan.
We compared results of Shenzhen case with other TCO results of BEB operations in Sweden, and
simulated TCO with the road cycles in Finland and California (table 6-10). Our results are lower than
other research results, mainly because of lower BEB prices, lower maintenance cost and exclusion of
battery replacement cost in this study. The lower TCO results for DB were mainly brought by the much
lower capital cost of DB in China (83,000 USD in our case) than those in the US (300,000 USD) and
the EU (225,000 USD) in the literature.
Figure 6-3 Variables that affect the diesel bus TCO per kilometer
88 Total Cost of Ownership
2.70
2.20
DB Price (土 10%)
Discount Rate (1%, 7%)
Annual Distance (50k, 100k)
Lifetime (6,15)
Low End
Hign End
Cost per km (Yuan)
4.9%, 3.57
-4.9%, 3.23
2.8%, 3.50-2.8%, 3.30
10.9%, 3.77-8.3%. 3.12
9.8%, 3.74-10.5%, 3.05
24.9%, 4.25-24.2%, 2.58
Diesel Price (Yuan/liter) (土 10%)
3.20
3.70
4.20
4.70
Figure 6-2 TCO results by year
1
0
50
150
100
2
Year
200
Cost (1000 yuan)
Residual
Tax and Fee
Maintenance
Energy
Capital
250
350
300
400
-100
-50
3
4
5
6
7
8
a b c
a b c
a b c
a b c
a b c
a b c
a b c
a. BEB cost without subsidy b. BEB cost with subsidy c. DB cost
a b c
Sensitivity Analysis
Sensitivity analysis helps diagnose the most important variables that affect the results of the TCO
analysis. The tornado plots are used to present the results of the variables affecting the TCO of DB
and BEB without subsidy.
Total Cost of Ownership 89
The increase of lifetime, annual driving
distance and discount rate reduces the per
kilometer cost of the diesel bus operation by
more than ten percent. A ten percent increase
in the bus price or diesel price will increase
the unit cost by less than five percent. TCO
per kilometer changes most significantly with
different bus operation lifetimes. If the bus’s
lifetime decreases from eight to six years,
TCO per kilometer will increase 24.9 percent
to 4.25 yuan; if the lifetime extends to fifteen
years, TCO per kilometer will decrease 24.2
percent to 2.58 yuan. The increase of annual
driving distance reduces the share of capital
costs per unit mileage. As a result, an
increase in the annual operating distance to
100,000 kilometers will decrease the TCO per
kilometer to 3.05 yuan, and a shorter annual
distance of 50,000 kilometers will increase
the TCO per kilometer to 3.74 yuan. The
discount rate of one percent results in a unit
TCO result of 3.77 yuan, and a seven percent
discount rate reduces the TCO to 3.12 yuan
per kilometer. A ten percent increase in diesel
price will result in a TCO per kilometer to 3.57
yuan, while a ten percent decrease in the
diesel bus price will bring the TCO per
kilometer to 3.50 yuan. That happens
because the energy cost constitutes 49.3
percent of TCO, much higher than that of
capital cost at 29.5 percent (figure 6-3).
Figure 6-4 Variables that affect BEBs TCO per kilometer without subsidy
2.00
1.00
Electricity Price (yuan/kwh) (土 10%)
Discount Rate (1%, 7%)
Annual Distance (50k, 100k)
Lifetime (6,15)
Low End
Hign End
Cost per km (Yuan)
7.3%, 4.41
-7.3%, 3.81
1.9%, 4.19-1.9%, 4.03
10.9%, 4.56-8.3%. 3.77
24.0%, 5.10-25.5%, 3.06
51.6%, 6.23-52.0%, 1.97
BEB price (土 10%)
3.00
4.00
5.00
6.00
7.00
The BEB’s TCO per kilometer results mirror
similar diesel bus costs with fluctuations in the
variables. An increase in the bus prices and
electricity raises the TCO per kilometer, and an
increase in the operating lifetime, annual
driving distance and discount rate decrease
the TCO per kilometer. If the operating lifetime
decreases from eight years to six years, the
BEB TCO per kilometer increases from 4.11 to
6.23 yuan. Extending the lifetime to fifteen
years would result in the cost per kilometer
decreasing by 52 percent to 1.97 yuan.
Extending the annual driving distance to
100,000 kilometers would bring down the cost
per kilometer by 25.5 percent to 3.06 yuan. A
ten percent increase of the bus price would
result in a 7.3 percent increase in the unit cost.
With a discount rate of one percent, the cost
per kilometer would decrease by 8.3 percent. A
ten percent variation of the electricity cost
would result in a 1.9 percent in the per kilome-
ter cost (figure 6-4).
distribution represents that the variable has an
equal likelihood in our assumed range.
Adopting these two types of distributions, we
made assumptions for the distribution of the
variables based on our analysis in the base
case. By making simulations based on the
variable distribution and our TCO model, we
can derive the distribution of our TCO results
(figure 6-5).
Uncertainty Analysis
We employed a Monte Carlo simulation to
illustrate our uncertainty analysis to reveal the
range of TCOs for the diesel bus and BEB
(table 6-11). The triangular distribution is a
simplified representation of normal distribu-
tion, which sets the base as the highest
probability, and together with the minimum
and maximum numbers, determines the
shape of the variable distribution. The uniform
Table 6-11 Monte Carlo distribution settings for diesel bus and BEB
Minimum Base Maximum Distribution
Diesel price (yuan/L)
Electricity price (yuan/kWh)
Annual mileage (1000 km)
Discount Rate
Lifetime (year)
Fuel Efficiency (L/100 km)
Energy Efficiency (kWh/100 km)
Maintenance BEB or Diesel bus
4.0
0.65
50
1%
6
34
80
20%
5.09
0.86
66
4.16%
8
37.9
107
36%
6.0
1.45
100
7%
12
42
120
100%
Triangular
Triangular
Triangular
Uniform
Triangular
Triangular
Triangular
Triangular
The diesel bus TCO distribution sits between
the BEB TCO with and without subsidy, which
echoes the results in the baseline analysis.
The total cost of a diesel bus is between 1.12
and 3.15 million yuan, the cost of a BEB is
between 0.75 and 2.30 million yuan with the
subsidy and between 1.75 and 3.30 million
yuan without the subsidy.
The energy cost and maintenance cost of the
diesel bus comprise 49 percent and 20
percent of its TCO respectively, and the total
distance of the bus operation over its lifetime
varies accordingly with our lifetime assump-
tions, annual driving distance, and diesel
price. As a result, the TCO of the diesel bus
has a wider distribution in our Monte Carlo
analysis. With a longer annual distance and
longer operation lifetime (on the right side of
the curves), a high probability indicates that
BEB even without subsidy would have
comparable or lower TCO than that of diesel
buses.
The total driving distance contributes to the
wider distribution of the diesel bus’s TCO,
while in the per kilometer analysis, the
variation in the total driving distance cancels
out in the differences of the unit cost. As a
result, per kilometer costs for the diesel bus
have lower variation compared to the total
cost, but augment the fluctuations in diesel
price, discount rates, and other variables
(figure 6-6).
90 Total Cost of Ownership
1
Figure 6-5 Total cost distribution
Note: Diesel bus total refers to its TCO, BEB total refers to its TCO with subsidy, BEB nS total refers to its TCO without subsidy.
Figure 6-6 Unit cost distribution
Note: Diesel bus total refers to its TCO per kilometer, BEB total refers to its TCO per kilometer with subsidy, BEB nS total refers
to its TCO per kilometer without subsidy.
1000
1500
2000
2500
3000
Total Cost (1000 Yuan)
Probability Density
BEB Total
DB Total
BEB nS Total
2
3
4
Total Cost per km (Yuan)
Probability Density
BEB Total
DB Total
BEB nS Total
5
6
In BEB per kilometer costs, the TCO is significantly affected by assumptions regarding driving distanc-
es. As a result, the per kilometer cost of BEBs without subsidy has greater variation than those
observed in the total cost. However, the Monte Carlo projection results indicate a high probability that
the unit cost of BEBs without subsidy would be comparable or lower than that of the DBs.
Total Cost of Ownership 91
6.3 Charging
Infrastructure TCO
Before the electrification of their bus fleet, the
SZBG owned two gas stations with several
vehicles to provide fuel for their diesel buses.
The SZBG also hired specialized staff to fuel
the fleet. The charging service providers bear
the cost of the construction and operation of
the charging station with qualified staff, and
the bus company pays only the electricity cost
and service fees associated with charging for
BEBs. One hundred and four charging stations
with a total of 1,707 charging terminals were
built to serve the BEB fleet by the end of 2018.
Our study estimates the total cost from the
perspective of the charging station owner. The
total cost comprises costs of construction of
the charging station, the high- and low-voltage
lines and devices for transmitting electricity to
the charging station, the cost of chargers, land
rental, operation of the charging station, and
the residual value of the charging station after
its service life. The revenues of the charging
station owners come from the service fee that
the SZBG pays.
Many factors affect the size of charging
stations, such as land availability, charging
demand at different locations, speed of
charging terminals, and grid capability. Our
study assumed a typical charging station to
contain 20 charge terminals rated at 150
kilowatts and 40 bus parking spots. A BYD K8
electric bus can be fully charged over two
hours at a rate of 150 kilowatts. The buses
charge during off-peak hours in Shenzhen
between 2300 and 0500 hours, and we
assumed the serving capacity of the charging
station to be 60 buses every day.
Access to land has become increasingly
challenging in Shenzhen because of a combi-
nation of lack of available land and electricity
capacity in the distribution grid. Any new
charging station requires significant power grid
infrastructure upgrades to increase its capaci-
ty. Over the period 2016–18, safety require-
ments of transformers became significantly
more intense, which consequently increased
construction costs. Previously, the charging
station company could employ a simple
container-type transformer that was flexible
and had no requirements for housing. Howev-
er, newer rules require transformers to be
properly housed, necessitating both land
ownership, and concrete and permanent
constructed facilities.
The main stakeholders in the charging
business in Shenzhen comprise utility compa-
nies, charging station manufacturers, charging
service providers, and landowners. Our study
used data from the SWT—a charging service
provider and charger manufacturer—thereby
facilitating relatively lower costs for stations’
initial investment and maintenance (figure 6-7).
92 Total Cost of Ownership
Figure 6-7 Liuyue charging station operated by Winline
a. (upper-left) BEB at charging dock; b.(upper right) Charging operated by professional charging staff wearing protective glove;
c. (bottom) BEBs line up in charging station docks.
6.3.1 Infrastructure TCO model
Estimates of the TCO of the charging station included initial capital cost, operation cost, and residual
value (equations 6-4 to 6-6).
Equation 6-4
Total Cost of Ownership 93
Equation 6-5
In year t,
6.3.2 Initial Investment
6.3.2.1 Construction and Grid Connection
Existing bus parking lots could be transformed into a charging lot simply by installing the chargers. A
newly constructed charging station would include the construction of the pavement, office, and
chargers. Advanced structures like a roof could be built to protect the buses from rain. A solar roof
was constructed in some stations to charge the buses with clean electricity.
In the case of a sample charging station with 40 bus parking spots within 10,000 square meters in
area, 300 square meters were allocated to the charging facilities and related building. Twenty 150
kilowatts DC fast charging terminals with 40 charging plugs were installed. The construction costs
included high voltage cable and equipment, low voltage cable and hardware, charging terminals,
safeguard and fire prevention devices, and other miscellaneous civil works construction expenses
(table 6-12).
Table 6-12 Cost structure of a charging station construction
Expenses (million yuan)
High-voltage cable and equipment
Low-voltage cable and equipment
Charging terminals
Safeguard and fire prevention devices
Construction expenses
Total
2.18
1.59
1.62
0.19
2.10
7.68
94 Total Cost of Ownership
Equation 6-6
Often, the high voltage and electricity
demands of the charging station exceed the
capacity of the existing regional grid. The local
grid company must upgrade the distribution
network and transformers to accommodate the
charging stations. In some cities, this service is
a significant cost and constitutes a significant
portion of the total cost (Xiong, Zhang,et al. .
n.d.). In Shenzhen, the grid company
upgrades the network, and the charging
service providers pay for the costs.
6.3.2.2 Charging Terminals
The cost of charging terminals has been
steadily decreasing over time from about 750
yuan per kilowatt in 2016 to 450 yuan per
kilowatt in 2019. Since most of the charging
terminals were constructed in 2016 and 2017,
we assume the average cost of charging
terminals is approximately 700 yuan per
kilowatt.
6.3.2.3 Municipal Subsidy
The municipal government provides a subsidy
for the construction of charging stations. The
municipal government provided a subsidy of
300 yuan per kilowatt for DC fast-charging
stations in 2016, and increased it to 600 yuan
per kilowatt based on the total power of the
charging station in 2017 and thereafter.
6.3.3 Operation Cost
6.3.3.1 Land Rental
Historically, SZBG experienced a shortage of
bus parking lots. Before full electrification,
about half of the diesel buses parked on the
streets during nighttime. However, BEB
require parking spaces to be built to accom-
modate charging during nighttime. Therefore,
more bus parking lots had to be built,
equipped with charging facilities to meet the
demand. Typically, for each bus, an area of 12
meters multiplied by 3.5 meters is allocated,
and they are spaced 0.5–0.7 meters from
each other. The charging service providers
and bus companies worked hard to expand
parking and charging facilities. Some of the
parking lots and charging stations only have
temporary land-use permits by leasing instead
of ownership of lands, which leads to higher
risks of operation if lands were to be
withdrawn by owners for other purposes.
The average monthly land rent in 2016 varied
between 10–100 yuan per square meter based
on their locations. Our study assumes a base
rate of 30 yuan per square meter. In this case,
twenty 150 kilowatts charging terminals and
related housing are estimated to occupy about
300 square meters land, for which the
charging service provider absorbs the cost of
rent.
6.3.3.2 Labor
Unlike private electric passenger vehicles,
charging is not performed by the driver but
rather by specialized electricians at the bus
charging stations to minimize safety risks. On
average at Winline Technology, the labor
allocation is approximately one-seventh to
one-tenth electrician per charging terminal,
working three shifts per day, and amounted to
four staff members with an annual labor cost
of about 288,000 yuan.
6.3.3.3 Repair and Maintenance
During our interviews, it was revealed that the
repair and maintenance costs were about
3,000 yuan per charging terminal every year.
The repair and maintenance costs for 20
charging terminals in this case would approxi-
mate to 60,000 yuan annually.
Total Cost of Ownership 95
6.3.4 Lifetime and Residual
value
Factors that affect the lifetime of the charging
stations include the availability of land, the
length of time to construct the charging
station, and the lifetime of cables, devices,
and chargers. In Shenzhen, the most
challenging issue affecting the lifetime of the
charging station is land availability.
Typically, the designed life of a charger is
eight to ten years. Our study assumed that the
charging station has permanent land availabil-
ity, and that the lifetime of charging terminals
is eight years. It is to be expected that after
eight years of operation, the cost and the
technical configuration of the charging termi-
nals could also change substantially on
account of technology evolution, and that the
charging terminal devices would be replaced
with zero residual value. But the cables or
tunnels and transformers have a design life of
about thirty years with appropriate
maintenance. The residual value of the assets
at year eight is estimated at 50 percent of the
original capital cost.
6.3.5 TCO Results
The total cost of a charging station with 20
charging terminals of 150 kilowatts is 7.32
million yuan at a 4.16 percent discount rate.
The cost of cables, initial construction, and
labor costs are the largest three contributors
to the total cost, followed by the cost of the
charging terminals, land rental, maintenance
and supporting devices (figure 6-8). The
subsidy from the government canceled the
charging terminal cost, which relieved the
burden for the investors at the initial stages.
Distributing the total costs over the 60 buses it
services, the value of charging terminal cost is
122,000 yuan per bus.
Figure 6-8 Value of charging station cost components in 2019
96 Total Cost of Ownership
Charging Station Components Costs
(thousand yuan)
0
1000
3000
2000
4000
-1000
-2000
Cable
Construction
Labor Terminal
Land
Rental
Maintenance
Supporting
Device
Cable
Residual
Terminal
Subsidy
Figure 6-9 Yearly and cumulative costs and revenues for each bus charging
As noted, the charging station operator can get about 58 percent revenue return over eight years when
comparing the present value of service fee per bus over eight years of 193,000 yuan. It would take six
years to get back the original investment in our assumption of each charging terminal serving only
three buses a day (figure 6-9).The payback period could shorten to four or five years taking the cable’s
residual value into account.
Total Cost of Ownership 97
Annual and Cumulative Cost and Revenue ( thousand yuan)
-20
30
80
1
2
3
4
5
6
7
8
130
180
230
Year
Cumulative Total Cost
Cumulative Total Revenue
Cost
Revenue
6.4 Discussion
In Shenzhen’s massive replacement of the
BEB process, government incentives and the
manufacturer’s full lifetime warranty played a
significant role in making BEB’s TCO lower
than the diesel fleet for the bus operating
company. The development and evolvement of
BEB technology made it possible to replace
the diesel bus with one-to-one ratio. With the
technology development and massive produc-
tion, the TCO of BEB will drop steadily in the
following years, making it more comparable
with the TCO of a diesel bus.
Lower energy costs and lower maintenance
costs could save the transit bus operation
company a great amount of money through the
operation years of BEBs. With the passenger
trips shifting from bus to metro service, bus
routes get modified from longer commuting
routes to shorter ones, serving more as feeder
lines connecting the metro stations with
business centers and residential communities.
As a result, the annual driving distance is
envisaged to decrease further for urban buses.
From our analysis, a longer driving distance
could improve the cost efficiency of BEBs, and
we would recommend that the bus companies
extend the lifetime of the buses and extend the
warranty with the BEB manufactures to
capture more benefits from BEBs.
The charging service providers invest heavily
on the charging infrastructure. With the
government subsidy at the early stage,
charging service providers would need four to
five years, on average, to get returns on their
investment. The charging stations at bus
parking lots serve only BEBs. However, with
better operation arrangements, the bus
charging stations can provide charging
services to electric taxies, electric logistic
vehicles and private EVs when a vacancy
arises, to increase profits from service fees.
Land availability for charging stations remains
as one of the key issues in Shenzhen and
requires the careful planning and implementa-
tion of land use for urban areas.
98 Total Cost of Ownership
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Breetz, Hanna L., and Deborah Salon. 2018. “Do
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Lajunen, Antti, and Timothy Lipman. 2016. “Lifecycle
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tion/informationinfo?id=204&cook=1
Total Cost of Ownership 99
Chapter 7
Environmental Impacts
• The life cycle GHG emission of an electric bus accounted about 52% of the
emission from similar diesel bus in Shenzhen
• The lifetime GHG emission reduction of one 10.5m bus before and after electrifi-
cation could reach to 274 tons CO
• After electrification, SBG achieved the annual GHG emission reduction about
194,000 tons CO from their electric bus fleet
• Cleaner power grid can generate more reduction benefits of bus electrification
2
2
Powered by electricity, electric buses are
generally considered to produce fewer emis-
sions that contribute to climate change and
local air pollution than diesel buses. However,
the exact amount of these emissions depends
on multiple factors including driving condition,
charging behavior, and electricity mix that vary
by geographic location. Our study conducted
an environment analysis to complement our
TCO analysis (chapter 5) to have a compre-
hensive view of socio-economic benefits of
deploying an electric bus fleet in Shenzhen. In
this study, the selected sample vehicles for
electric and diesel bus are the same as used
in our TCO analysis—namely BYD K8 and
Yutong 10.5-meter diesel bus.
7.1 Methods
7.1.1 GHG Emission and
Pollutant Emission of BEBs
Studies have shown that the operation or use
phase of ICEVs accounts for approximately
83–95 percent of the total life cycle GHG
emissions. (Sims et al. 2014; Ambrose and
Kendall 2016; Archsmith et al. 2015; Norton
and Bass 1987; Ying et al. 2018). The tailpipe
emission is zero in EVs because they use
electric power rather than gasoline or diesel as
their energy. This shifts a greater portion of life
cycle emissions to non-operation stages, that
is vehicle production phase and electricity
generation stage. In addition, studies show
that charging EVs on different grids (Zhou et
al. 2010) and different patterns of charging
(Hawkins et al. 2013) can significantly alter the
GHG intensity of EV operation, and present
new challenges in calculating GHG emissions
for electric vehicles. The charging time and
location are regulated for BEBs operated in
Shenzhen, which is usually full charging at
night at the depot, plus one quick charging
during the daytime if needed. A typical full life
cycle assessment (figure 7-1) of EV incorpo-
rates vehicle and battery production phase,
electricity generation, use phase, and end of
life (Dér et al. 2018). In this study emissions
from the end-of-life stage are excluded
because of data unavailability, and because
they are considered minor in comparison to
production and use phase emissions. In terms
of vehicle production phase, production
emissions of bus body, chassis, and power-
train of both the electric and diesel bus are
similar if the same size and materials are used
(Nordelöf et al. 2019). The differences in
emissions from vehicle production are mainly
from the emissions from battery production for
the electric bus, which are estimated in this
report.
Environmental Impacts 101
Figure 7-1 Description of comparative life cycle assessment in this study
102 Environmental Impacts
Vehicle Production
Chassis Production
Body Production
(electric or conventional)
Powertrain Production
Battery Production
Diesel Bus
Use Phase
Electric Bus
Use Phase
Background System
Electricity Production Diesel Production
Electricity Mix
Local Conditions
Diesel Type
Spatial Context
7.1.1.1 GHG Emission from Battery Production
Emissions from battery production take a large share of the life cycle carbon dioxide emission of EVs.
A recent study by China Automotive Technology and Research Center Company (CATARC 2018)
details the carbon dioxide emission of top-selling EVs in China, including the production of batteries
and other body parts, and EV use-phase emissions or electricity generation (figure 7-2).
Figure 7-2 Average emissions rates across 2018 PEV models in China
Note: Statistics include production of battery, other body parts, and fuel.
Compared to electric passenger vehicles, BEBs have a much larger battery pack and therefore larger
battery capacity that would generate more emissions in the battery production phase, including
material extraction, cell assembly, packaging, and other part production. EV battery manufacturing
emissions have been studied extensively (Ambrose and Kendall 2016; Messagie 2016; Han et al.
2017; Romare and Dahllöf 2017; Wolfram and Weidmann 2017; Dunn et al. 2016) and result in a wide
range of estimates. As many of these studies show, the largest share of carbon emissions in battery
production comes from the mining and production of raw materials. Table 7-1 compares studies since
2016 analyzing the emissions related to EV battery production using China’s grid, except for the study
(Ambrose and Kendall 2016) which uses Japan’s grid. These studies vary in scope and methodology
and provide a range of values for greenhouse gas emissions attributable to battery production.
Considering the rapid development of lithium-ion battery industry and the local power mix, this study
uses battery production emission factor from the CATARC report (CATARC 2018), generated from
market research in China.
Environmental Impacts 103
50
0
100
150
ChangeAn 2018EV 260
SAIC Ei5 2018
200
250
300
350
400
Tesla Model 3
Geely 2018 EV450
Battery Production
Other Parts Production
Other Parts Production
Fuel Production
g CO2 e/km
76.1 36.6 162.3
30435.736.6
45 35.5 145.5
35.3 22.7 144
Table 7-1 Studies on EV battery production GHG emission
Emission for battery
production (kg CO e/kWh) Battery type
YearAuthors
127
97
104
30–270, average 161
30–270, average 161
50–75, average 55
248–258, likeliest 254
246–257, likeliest 252
207
85
LiFePO
LiNiCoMn
LiMn O
LiFePO
LiNiCoMn
LiMn O
LiFePO
LiNiCoMn
China market average
LiFePO4
4
42
4
2 4
4
2017
2017
2016
2018
Hao et al.
Romare and Dalhoff
Ambrose and Kendal
CATARC
7.1.1.2 Emission from electricity generation
The estimation of carbon emission and other pollutants of electricity generation is complex, and
varies in methodology, data and the grid mix from different energy sources. Our study calculated the
emission factor using the following variables (equation 7-1).
Equation 7-1
2
104 Environmental Impacts
Where:
•P
i
is the annual emission of pollutant i from electricity generation
•yis the category of energy in the study area
•M is the set of electricity source in the study area
•A
i, y
is the percentage of energy y used for electricity generation in the study area
•Q
e
is the electricity consumption of electric bus (kWh/100 km)
•
charge
is the charging efficiency
•
T&D
s the rate of energy loss during the transmission and distribution process
•
i, y
is the emission factor for pollutant i from use of energy source y.
7.1.2 GHG Emission and
Pollutant Emission of Diesel
Bus
7.1.2.1 Emissions from bus driving
The most widely used research methods
include simulation modeling, bench testing,
tunnel experiment, and vehicle testing for
ICEVs to account for diesel bus emissions
(Tian et al. 2016; Sjodin and Andreasson
2000; Xie et al. 2006). In this study, we
selected simulation modeling as the method
for calculating emissions in diesel buses. The
simulation model can be roughly categorized
in two types based on driving condition or on
average speed (Ma et al. 2008; Niu 2011;
Zhang et al. 2011).
Our study uses an average speed model, the
COPERT model, to calculate the vehicular
emissions of diesel buses. The COPERT
model originated from a vehicle-emission
factor study carried out by the European
Economic Area (EEA). Most countries of the
European Union (EU) use the COPERT model
to calculate vehicular emissions, and the
Intergovernmental Panel on Climate Change
(IPCC) also adopted the COPERT model in its
guidelines revised in 2006 (Athanasiadis et al.
2009; O’Driscoll et al. 2016). Engine technolo-
gy and actual operating conditions in China
are comparable to those in Europe, and the
tailpipe emission standards in China are also
formulated with reference to standards in
Europe (CAERCT. U. 2014; Fan et al. 2015;
Can and Xie 2010). Thus, it is widely accepted
that COPERT model is more applicable to
situations in China, compared to other models
like MOBILE model (Xie et al. 2006; Fan et al.
2015; Can and Xie 2010). In addition, the
COPERT model requires relatively fewer input
parameters, and can calculate multiple types
of pollutants at the same time. Therefore, this
study uses a modified COPERT model to
calculate the tailpipe emissions of diesel
buses.
Our study conducted an on-site survey at the
SZBG headquarters in June 2019 and used
the COPERT model to calculate diesel bus
emissions with the following considerations:
• Our parameters of diesel buses were
collected from desktop research because the
unavailability of data for diesel buses that the
SZBG used before bus electrification.
• Most tailpipe emission standards in
China refer to the European standard system
(Zhou et al. 2010; Tian et al. 2016; Sjodin and
Andreasson 2000; Xie et al. 2006; Ma et al.
2008; Niu 2011; Zhang et al. 2011; Athanasi-
adis et al. 2009), and it is reasonable to
assume that the Chinese standard, National
IV, approximates to the European standard
Euro IV.
• The diesel bus has a maximum load
of 15 tons and complies with the National IV
emission standard. The average driving speed
is 20 kilometers per hour on urban roads.
According to National Diesel Standard for
vehicle use, the sulfur content of diesel is
0.005 percent.
• Based on information from the
Shenzhen Meteorological Bureau, the
average maximum temperature in the city in
the past five years is 34.58°C while the lowest
average is 6.02°C, and the average relative
humidity is 72.2 percent.
Vehicle emissions considered in this model
comprised three parts: emissions during
stabilized (hot) engine operation, emissions
during cold start, and fuel evaporation emis-
sions. Therefore, the calculation model of
emissions of a diesel bus per 100 kilometers
can be expressed (equation 7-2).
Environmental Impacts 105
Equation 7-2
Where:
•E
operation, i
is the total emission of pollutant i from diesel bus during its running of 100 kilometers
•E
hot, i
is the hot emission per 100 kilometers of pollutant i
•E
cold, i
is the cold-start emission per 100 kilometers of pollutant i
•E
eva, i
is the fuel evaporation emission per 100 kilometers of pollutant i
•i = 1,2,3,4,5,6,7 represents categories of pollutants, namely CO,NO
X
,VOC,PM
2.5
,PM
10
,
CO
2
and SO
2
.
Our calculations did not include cold start and fuel evaporation emissions because of their small
values compared to hot emissions.
7.1.2.2 GHG Emissions from Diesel Production
Our calculations considered emissions from diesel fuel production of well-to-tank for the diesel bus to
ensure emissions were comparable with the electric bus for which emissions from electricity genera-
tion are included (table 7-2).
Table 7-2 Emissions from the production of diesel used in transportation
Fuel CO e (g/MJ) Region and Year
Diesel MK 1
Diesel EN 590
Diesel
Diesel
Diesel EN590
Diesel
Diesel
9.25-9.34
9.37-9.44
12.4
9-24
14.2
15.9
14-17
Sweden, 2011
Sweden, 2011
Spain, 2009
Europe, 2012
Europe, 2010
Europe, 2011
International, 2004
2
The oil refinery is a complex process which involves several steps such as distillation, vacuum
distillation, or steam reforming to produce a large variety of oil products such as diesel and petrol.
Several studies have calculated the GHG emissions for variety of fuels, such as diesel, petrol,
bitumen, and liquefied petroleum gas (LPG) (Ahlvik and Eriksson 2011; López et al. 2009; Baptista et
al. 2010; Edwards et al. 2007; Lambert et al. 2012; Wang et al. 2004).
106 Environmental Impacts
In this study, GHG emissions from diesel production take the medium value of the three European
studies listed in table 6-2 (Baptista et al. 2010; Ahlvik and Eriksson 2011; Lambert et al. 2012), which
is 15.8 carbon dioxide equivalent grams per megajoule.
7.1.3 Emission Reduction from Electric Bus Compared to
Diesel Bus
We calculated the emission saving per 100 kilometers after the deployment of an electric bus over a
diesel bus (equation 7-3).
Equation 7-3
7.2 Emission Results
7.2.1 Emission Calculation for an Electric Bus
7.2.1.1 Emissions from Battery Production
The battery capacity for BYD K8 bus is 291.6 kilowatt-hour (kWh). According to CATARC’s market
research in 2017–18 (CATARC 2018), the average carbon dioxide equivalent emission of battery
production of LiFePO4 is 85 kilograms carbon dioxide equivalent per kilowatt-hour (CO
2eq
/kWh),
which is the type of battery used in BYD K8. Thus, the amount of carbon dioxide equivalent emission
from battery production is 24.786 tons. Batteries will be replaced every four years on average; thus,
an electric bus’s eight-year life cycle will use two brand new battery packages, increasing the total
emissions from battery production to 49.572 tons carbon dioxide equivalent. Considering that the total
mileage run by an electric bus is about 8 times 66,000 kilometers and equal to 528,000 kilometers,
the average emission from battery production per 100 kilometers is about 9.39 kilograms of carbon
dioxide equivalent.
7.2.1.2 Emissions from Electricity Generation
According to the 2019 Annual Report of China Electricity Industry Development (China Electricity
Council 2019), the major pollutants from electricity generation include nitrogen oxide, carbon dioxide,
and sulfur dioxide (NO
X
, CO
2
, and SO
2
) which come from coal-fired power plants. Figure 7-3 shows
the share of energy source in electricity generation of China Southern Grid.
Environmental Impacts 107
Figure 7-3 Energy source for electricity generation by China Southern Grid (2018)
Table 7-3 Emission factors from electricity generation (g/kWh), 2018
Emission Factor for
Coal-based Power Plant*
Pollutant Emission Factor for
China Southern Grid
NO
CO
SO
x
2
2
0.19
841.00
0.2
0.093
412.342
0.098
* Data source：2019 Annual Report of China Electricity Industry
The average electricity consumption of an electric bus per 100 kilometers (that is,) is 100
kilowatt-hour for the SZBG. According to the statistics provided by the SZBG, electricity loss during
charging can be controlled within 8 percent, which means that is 92 percent. The comprehensive line
loss rate of China Southern Power grid is 6.31 percent from 2018 data (China Power Industry Annual
Development Report 2019). Emissions from clean energy, such as hydropower, wind, and nuclear,
are relatively low, and therefore not included inTable 7-4. The table shows the emissions from electric-
ity generation, but excludes emissions that occur further upstream for instance, coal production.
108 Environmental Impacts
49.03%
37.04%
9.51%
4.15%
Coal Fire
Hydro
Nuclear
Nuclear
Wind and Other
Pollutant
Table 7-4 Emission of an electric bus from electricity consumption (g/100km)
NO
CO
SO
x
2
2
Coal-fire Total PollutantWindNuclear powerHydro power
10.81
47838.42
11.38
0
0
0
0
0
0
0
0
0
10.81
47838.42
11.38
The resulting GHG emissions of electric bus per 100 kilometers are calculated as in table 7-5.
Table 7-5 GHG emission of an electric bus (g/100 km)
Use phase
emission
Electricity
production
Total GHG
emission
Battery
production
2eq
CO 0 47838.42 57227.069388.64
Note: Calculations included emissions from battery production, fuel production and vehicle- use phase.
7.2.2 Emission Calculation of Diesel Bus
7.2.2.1 Emissions from Diesel Production
With the assumption that the energy density for diesel is 37.3 megajoules per liter, the GHG emission
factor from the diesel production phase can be calculated as 589.34 carbon dioxide equivalent grams
per liter (table 7-2). Data from the SZBG reporting indicate that the diesel consumption for buses is 40
liters per 100 kilometers (table 7-6).
Table 7-6 GHG emission from diesel production for one diesel bus per 100 kilometers
Emission factor (g/L) Diesel consumption
per 100 km (L)
Emission from diesel
production (g/100 km)
2eq
CO 589.34 40 23573.60
Pollutant
Pollutant
Environmental Impacts 109
7.2.2.2 Emissions from bus driving
Our study obtained emission factors for diesel buses and emissions for major pollutants for one diesel
bus per 100 kilometers after inserting the value of parameters into the COPERT model (table 7-7).
Table 7-7 Emission of a diesel bus when in operation
Pollutant Emission factor (g/km) Emissions for a diesel
bus (g/100 km)
CO
NOx
VOC
PM
PM
CO
SO
2.5
10
2
2
a
1.168
5.680
0.058
0.045 for PM
0.045 for PM
855.295
0.025
b
116.80
568.00
5.80
11.00
17.64
85529.50
2.50
Note:
a. calculation from COPERT model
b. PM in COPERT model is classified as PM2.5 and PM10
GHG emissions of one diesel bus per 100 kilometers, including the emissions from fuel production
phase and use phase are shown in Table 7-8.
Table 7-8 GHG emission of one diesel bus (g/100km)
Use phase emission Diesel production
2eq
CO
Pollutant Total GHG emission (g/100km)
109,103.1023573.6085529.50
Note: Emissions from well-to-tank diesel production, and tank-to-wheel use-phase emission included
110 Environmental Impacts
b
7.3 Comparison of Results
7.3.1 GHG Emission Reduction of Electric Buses
We conducted a comprehensive comparison for GHG emission with data on carbon dioxide equiva-
lent emission from diesel production and lithium-ion battery production (table 7-9). During the use
phase, a diesel bus generates 85.5 kilograms of GHG emission per 100 kilometers while the electric
bus is emission free on the road. However, the GHG emissions of an electric bus appears earlier in
the production stages, in electricity generation and battery production. The results show that the
average GHG emission per 100 kilometers of an electric bus is slightly more than half of the emission
from a diesel bus and the emission reduction is about 51.9 kilograms of carbon dioxide per 100
kilometers.
Electric bus Emission reduction after bus
electrification (gCO /100 km)
DieselStage
Table 7-9 GHG emission per 100 kilometers of one diesel and one electric bus (gCO )
2eq
85,529
23,574
Not applicable
109,103
0
47,838
9,389
57,227
85,529
-24,265
-9,389
51,876
Use phase
Fuel production
Battery production*
Total
2eq
With the unit carbon dioxide equivalent reduction per 100 kilometers, the lifetime GHG emission
reduction of an electric bus (BYD K8) can be calculated for an eight-year lifetime and 66,000 kilome-
ters annual mileage. The total GHG reduction could reach about 274 tons of carbon dioxide.
BYD K8 represents about two-third of SZBG’s total electric bus fleet. On the assumption that the
carbon reduction of BYD K8 represents the average reduction in all models of electric bus, then the
annual GHG reduction of the SZBG from bus electrification would be 194,000 tons of carbon dioxide,
with a total annual bus operation mileage of 374.11 million kilometers in 2018.
Environmental Impacts 111
* Note: This is a conservative calculation, since the battery displaces engines and other powertrain parts in a conventional
diesel bus for which the emissions are not included in this calculation.
7.3.2 Air Pollutant Emission Reduction
Battery electric vehicles produce zero tailpipe emissions, which specifically helps improve air quality
in urban areas. Electric buses running on the road emit none of the smog-forming pollutants, such as
NO
X
, and other pollutants harmful to human health. In addition, strict environmental control measures
enforced on power plants in China have resulted in significant reductions in the pollutant emissions
from coal-based power plants (table 7-10).
Table 7-10 Comparison of emission of 100 kilometers for one diesel and one electric bus (g)
Diesel Bus Electric Bus
CO
NO
VOC
PM
PM
SO
Pollutant
Emission reduction after
bus electrification
2.5
10
2
x
a b
116.80
568.00
5.80
11.00
17.64
2.50
0
10.81
0
0
0
11.38
116.80
557.19
5.80
11.00
17.64
-8.88
Note:
a. Analysis of diesel bus includes emission when driving.
b. Analysis of electric bus includes emission when driving (zero) and emission from electricity generation.
With the results in table 7-10 and the assumption that the total driving mileage in an eight-year
lifetime is 528,000 kilometers, we calculated the lifetime emission reduction of BYD K8 and the
annual emission reduction of SZBG’s electric bus operations, which is the difference between a BYD
K8 and a Yutong 10.5-meter diesel bus. The annual emission reduction from bus electrification is then
calculated for the total number of buses in the SZBG fleet (table 7-11).
112 Environmental Impacts
CO
NO
VOC
PM
PM
SO
Pollutant
2.5
10
2
x
Table 7-11 Pollutant emission reduction of bus electrification
Lifetime emission reduction of
electric bus (BYD K8) (kg)
Annual emission reduction of SZBG
from bus electrification (ton)
616.70
2941.98
30.62
58.08
93.11
-46.87
436.96
2084.49
21.70
41.15
65.97
-33.21
The electric bus has significantly lower life cycle emissions than a conventional diesel bus because
emissions are lower for electricity generation than from burning diesel. The amount of these emissions
depends on the region’s electricity mix (figure 7-3). The electricity mix in Shenzhen is greener than the
average China’s grid mix, with renewable energy having a share of more than 50 percent. The cleaner
grid in Shenzhen contributes to a larger emission reduction for the electric bus operation.
The annual emission saved from bus fleet electrification is significant, which indicates the high poten-
tial of electric buses for tackling climate change and air pollution issues. However, not all pollutants are
reduced after bus electrification. Sulfur dioxide formed through the combustion of coal in electricity
generation increased because of a higher density of sulfur in coal than in diesel. In this context, it is
worth mentioning that diesel emissions usually occur in an urban center where a larger population is
likely to be exposed, while emissions from electricity production for electric buses occur in coal power
plants in less densely populated areas.
7.3.3 Comparison of Emission Reduction between Different
Regions in China
Emission reduction is highly dependent on the grid mix of different regions. On average, most of the
electricity in China comes from coal, which accounted for 60 percent of the electricity generation mix in
2018. However, regional disparities exist in relation to energy used. Table 7-12 shows the share of
energy used in electricity generation in different regions of China. For example, China’s east coast
and the north region are dirtier—more than 70 percent of electricity comes from coal firepower plant—
by comparison. This is partly because of geographic limitation to install wind power generators and
hydropower infrastructures and the economic reason that the northeastern parts of the country have
historically relied on cheaper energy sources like coal.
Environmental Impacts 113
Table 7-12 Share of energy use in the power grid in different regions in China (2018)
Hydro Coal Fire Nuclear Wind & Solar
South Region
South West Region
Central Region
East Region
North East Region
North Region
China Avg.
37.04%
12.47%
40.91%
8.14%
5.60%
1.99%
18.60%
49.03%
53.56%
47.47%
71.45%
64.84%
73.82%
60.20%
9.51%
0.00%
0.00%
5.89%
3.05%
0.30%
2.40%
4.15%
33.97%
11.62%
14.51%
26.52%
23.88%
18.90%
Data source:2019 Annual Report of China Electricity Industry
Shenzhen lies in southern China, one of the cleanest regions relative to energy generation. Thus, the
power supply for an electric bus results in a larger emission reduction in Shenzhen compared to other
regions in China. Table 7-13 lists the carbon dioxide equivalent emission of electric bus per 100
kilometers by different regions in China, taking the same assumption that the electricity loss during
charging is eight percent, and the comprehensive line loss rate
1
is 6.31 percent.
Table 7-13 Benefits of electric bus in different regions in China
CO
Electric bus (South Region)
Electric bus (South West Region)
Electric bus (Central Region)
Electric bus (East Region)
Electric bus (North East Region)
Electric bus (North Region)
Electric bus (China average)
51,876
47,451
53,399
29,997
36,455
27,686
40,978
Reduction after bus electrification (g/100km)
2eq
114 Environmental Impacts
Figure 7-4 Relationship between share of coal and benefits of bus electrification
In our study, analysis shows that bus electrification reduces a significant amount of GHG emissions,
but with variations in different regions in China. On average, an electric bus in China can reduce
37.56 percent of GHG emissions compared to a diesel counterpart from a life-cycle perspective. In
regions utilizing higher share of clean energy in electricity generation—that is in the central region of
China—the benefits of electrifying buses can increase up to 48.94 percent., In regions with high
dependence on coal for example, in the northern region, electric buses can also be used as a method
to achieve cleaner transportation, with about 25 percent, of GHG reduction compared to diesel buses
(figure 7-4). This finding is significant since it shows that even under a very dirty electricity mix,
electric buses are still cleaner than diesel buses.
Notes
1
Loss of energy, across power lines, during the transmission of electricity.
Environmental Impacts 115
0
2000
4000
6000
South
Region
GHG benefits between electric and diesel bus (g/100km)
share of GHG reduction from bus electrification
GHG benefits between electric and diesel bus (g/100km)
South West
Region
Central
Region
East
Region
North West
Region
North
Region
China
Avg.
0%
20%
40%
60%
80%
share of coal in electricity mix (%)
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Environmental Impacts 117
Chapter 8
Cost-Benefit Estimation
8.1 Introduction
Criteria air pollution (CAP) emissions from diesel bus operation and power generation can harm
human health, impair visibility, and damage buildings among many other negative externalities. GHG
emissions from transport accelerate global warming and its negative impacts on the planet. China’s
President Xi Jinping has announced at the United Nations General Assembly in 2020 that China will
strengthen its 2030 climate target, peak emissions before 2030, and aims to achieve carbon neutrality
before 2060. Every sector including the transport sector, which has the highest growth rate of GHG
emission among all sectors in China,1 needs to take every effort both in policy guidance and technolo-
gy transformation to achieve this ambitious goal. When evaluating the adoption of new technologies
like battery electric buses, cost–benefit analysis helps present its social and environmental benefits
making them comparable to traditional technologies that often have lower direct costs but high external
costs on account of CAP and GHG emissions. When analyzing alternative technologies, the avoided
emissions are benefits of the implemented environmentally friendly alternative.
The damage–cost approach adopts a multistep damage function to analyze the effects on air quality
from pollutant emission, the relationship between air quality and health effects, the causality of popula-
tion exposure and population characteristics, the morbidity and mortality caused by the air pollutants,
and the statistical life value to monetize damage caused. As each step involves uncertainty and
assumptions, cumulatively, the results show high levels of variability. Therefore, the result is usually
presented with a wide range, while the high end can be very high due to high statistical life value
assumptions based on local salary levels, for example.
In this study, we calculate the life cycle CAPs and GHGs emission benefits of BEB based on the cost
analysis in chapter 6 and environmental assessment results from chapter 7.
We include CAPs of PM2.5, PM10, NOX, VOC, and SO2; and GHGs of CO2, CH4, NO2 in the CO2eq.
118 Environmental Impacts
8.2 CAPs and GHGs
We consider two strategies for assessing the damage costs of CAPs and GHGs. For GHGs, we adopt
global GHG marginal cost in the estimation to account for its impact on climate change. CAPs valua-
tion, on the other hand, should be based on local air quality impacts, city population characteristics,
and statistical life value for residents. Shenzhen is leading Chinese cities on air quality and air emis-
sion control. The annual average pollutant concentrations in Shenzhen from 2014 to 2019 (figure 8-1),
are better than most Chinese cities, and have been dropping for PM2.5, PM10, NO2, and SO2. To
account for the air quality and residents’ income benefits in Shenzhen, we adopted the EU’s 28
countries’ average damage cost for CAPs owing to the unavailability of local data.
Source: Shenzhen Ecology and Environment Bureau, Shenzhen Environmental Status Bulletin 2014-2019, http://meeb.sz.gov-
.cn/xxgk/tjsj/ndhjzkgb/
Note: The O3 statistic record changed from annual average concentration to 90 percentile concentration in and after 2017 and is
not included here.
Figure 8-1 Annual average air quality in Shenzhen during 2014-2019
Cost-Benefit Estimation 119
Annual Average Concentration (ug/m3)
10
0
20
30
40
SO2
PM10
50
60
70
NO2
PM2.5
O3
CO
2014
2015
2016
2017
2018
2019
Based on analysis from the IPCC, the UNFCCC Paris Agreement states that world temperature
should not increase by more than 2 degrees Celsius in 2100 compared to the pre-industrial levels and
strong efforts should be made to stay within 1.5 degrees Celsius. China is a signatory to the Paris
Agreement and has committed to reduce its GHG emissions. Shenzhen is one of the seven pilots for
carbon trading markets in China. The trading price of carbon on the Shenzhen market in 2019 was
20–30 yuan per ton (USD 2.86–4.29/ton) (Slater et al. 2019), much lower than the amount from the
US and the EU.
The GHG emissions are global externalities and the market prices mentioned above are not high
enough to achieve the goals of the Paris Agreement. In order to capture social benefits from reduced
GHG emissions or costs from increased emissions in economic analysis, the shadow price of carbon
is adopted in GHG accounting in World Bank financed projects.2 Instead of a central estimate, a
range of values is used to justify the uncertainty and the need to consider the country context. From
2017 to 2050, the lower value of shadow price of carbon ranges from USD 37 to 78 per ton carbon
dioxide equivalent and the higher value from USD 75 to 156 per ton carbon dioxide equivalent (figure
8-2).
Figure 8-2 Shadow price of carbon in USD per 1 metric ton of CO2 equivalent (constant prices)
120 Cost-Benefit Estimation
Value of Carbon in USD / tCO2e (constant prices)
40
0
80
120
160
17
High Estimate
Low Estimate
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
Year
Low
High
17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50
37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 55 56 57 58 60 61 63 64 65 67 68 70 71 73 75 76 78
75 77 78 80 82 84 86 87 89 91 94 96 98 100 102 105 107 109 112 114 117 120 122 125 128 131 134 137 140 143 146 149 153 156
8.3 Marginal Cost for Damage Estimation
The CAP estimation should ideally be based on local data. However, environmental cost data avail-
able for Shenzhen or Guangdong area are either focus on or cover only one or several specific
pollutants (Zhang and Duan 2003; D. Huang, Xu, and Zhang 2012) (Li et al. 2019; Duan et al. 2019).
Considering that the economy, air quality, and fleet composition of Shenzhen are similar to European
cities (Sun et al. 2014), and that the European Commission (CE Delft 2019; Schroten et al., 2019)
cost factor data are comprehensive reflecting all relevant environmental impacts including health
effects, crop loss, biodiversity loss, and material damage, we used the EU 28 average cost factor for
the transport sector for the CAP externality estimation as an approximation (table 8-1).
We adopted the values for the price of carbon for 2017 to 2024 (table 8-2) from the World Bank
Shadow Price of Carbon Guidance Note for the eight-year life cycle of BEB.
Table 8-1 CAP cost from EU 28
Table 8-2 Shadow price of carbon (USD/tCO2eq)
Cost-Benefit Estimation 121
Unit
USD/ton
NO
X
23856
VOC
1344
PM
2.5
426720
PM
10
24976
SO
2
12208
Year
Low
High
2017
37
75
2018
38
77
2019
39
78
2020
40
80
2021
41
82
2022
42
84
2023
43
86
2024
44
87
8.4 Emissions and Benefits
We concluded the environmental damages from CAP as calculated in chapter 7 and GHG over eight
years from BEB and DB (table 8-3, table 8-4, and figure 8-3).
Diesel bus (ton/year)
Electric bus (ton/year)
Difference (ton/year)
USD per year
USD per 8 years (i.e. life cycle)
(with discount rate of 3%)
Table 8-3 Estimated economic benefits from air pollutant emissions reduction for the bus fleet
Table 8-4 Estimated economic benefits from the reduction of GHG emissions from the bus fleet
Low
High
Average (USD)
USD per 8 years (i.e. life cycle)
(with discount rate of 3%)
122 Cost-Benefit Estimation
NO
X
0.375
0.007
0.368
8772.9
61118.6
VOC
0.004
0.000
0.004
5.1
35.8
PM
2.5
0.007
0.000
0.007
3098.0
21582.8
PM
10
0.012
0.000
0.012
290.8
2025.8
SO
2
0.002
0.008
-0.006
-71.5
-498.5
Pollutant
2017
1267
2568
1917
2018
1301
2636
1969
2019
1335
2671
2003
2020
1370
2739
2054
2021
1404
2808
2106
2022
1438
2876
2157
2023
1472
2944
2208
2024
1506
2979
2243
Year
14434
Figure 8-3 Bus operation pollution damage from DB and BEB
Figure 8-4 Economic benefits from BEB avoided CAPs and GHGs in 8 years
Cost-Benefit Estimation 123
61.9%, NOX
21.9%, PM2.5
14.6%, CO2e
2.1%, PM10 -0.5%, SO2
0.0%, VOC
Damage Value (USD Thousand)
20
0
40
60
80
NOX
VOC
PM2.5
PM10
SO2
CO2e
DB
BEB
DB
We assume the environmental benefits of BEB deployment as the avoided damage from DB pollution.
This results in a total environmental benefit of one BEB over a lifetime of eight years over one DB of
USD 98,699 of which 61.9 percent is from NOx reduction, 21.9 percent from PM2.5 abatement, and
14.6 percent from GHG emission reduction (figure 8-4).
Figure 8-5 TCO and environmental cost of DB and BEB
124 Cost-Benefit Estimation
The total cost of operating with DB including the environmental costs would be higher than that of
BEB (figure 8-5)—demonstrating the high economic benefits of fleet electrification.
The total subsidy that the SZBG received from the national and local governments for one bus was
one million CNY (equivalent to about USD 0.15 million) in 2016. The benefits from CAPs and GHGs
are 30 percent less than the subsidy. Government incentives in 2016 exceeded the environmental
benefits with our conservative assessment, and the lowered subsidy in 2017 matched the benefits.
However, at the introductory stage of the new technology, a lower subsidy may not be enough to
stimulate the manufactures to invest in the uncertain industry. A higher subsidy is necessary to jump
start a new technology, and it can later be reduced once the technology gets more competitive.
Cost (thousand yuan)
0.5
0
1
1.5
2
DB
BEB
2.5
3
TCO, 1796
Env. Cost, 815
TCO, 2170
Env Cost, 124
Note: Environmental cost is abbreviated “Env. Cost” in figure.
8.5 Discussion
Cost–benefit analysis provides a critical
reference for designing and adopting effective
emission reduction policies, and to account for
the negative externalities from the fossil fuel
consumption. We estimated the environmental
benefits of the replacement by comparing BEB
with DB on the CAP and GHG benefits. Our
result shows that air emission reduction
benefits from the adoption of BEB in SZBG are
about 70 percent of the government subsidy.
As with our cost analysis, we kept the same
mileage, the number of buses, and passen-
gers transported before and after electrifica-
tion. However, in practice, the numbers vary
on the operation. The transit bus lines were
restructured to accommodate the operation
and charging schedules; the number of
passengers and distance of passenger travels
was also affected by the operation of the city
subway system and other transportation
modes. We evaluated the comparison of the
same activity of DB and BEB on a one-to-one
ratio. When other cities consider adopting
BEBs, the cost and benefit differences caused
by the fleet number and operation structure
adjustment should be factored in.
The monetized benefit from air pollutants
emission is equal to about 70 percent of the
subsidy from the governments. The benefit
supports the subsidies for incentivizing the
transit fleet electrification. The benefit estima-
tion is conservative since we did not include
other benefits, such as noise reduction,
passenger and driver comfortability improve-
ment, grid stability improvement, easier data
collection to improve bus operation, fleet
management, and monitoring. We are confi-
dent with the results that transit bus fleet
electrification brings significant economic
benefits to local residents.
Cost-Benefit Estimation 125
Notes
1
Data from National Center for Climate Change
Strategy and International Cooperation http://ww-
w.ncsc.org.cn/yjcg/fxg-
c/201801/P020180920510030806443.pdf
2
Guidance note on shadow price of carbon in
economic analysis. The World Bank, November 12, 2017.
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126 Cost-Benefit Estimation
Part III
Key Findings:
Total Cost of Ownership of
Electric Buses
In the case of the SZBG, government subsi-
dies and the manufacturer’s full lifetime
warranty played a significant role in making the
electric buses’ total cost of ownership (TCO)
lower than the diesel fleet for the bus operating
company. The TCO is 36 percent lower for
BEBs than for DBs; a promising and great
statistic due to the lower energy and mainte-
nance cost of the BEBs. However, if the
subsidies are excluded, the TCO of BEBs is 21
percent higher than DBs.
Driving distance and operating lifetime are the
two major factors that could improve the TCO
of battery electric buses without subsidies.
Extending the bus lifetime to fifteen years—as
is common practice in many countries around
the world—would result in the cost per kilome-
ter for electric buses decreasing by 25 percent.
Likewise, increasing the annual driving
distance from 66,000 to 100,000 kilometers
would reduce the cost per kilometer by 18
percent. We, therefore, recommend that bus
companies extend the lifetime of the buses
and extend the warranty with the BEB manu-
factures to capture more benefits for BEBs,
and take advantage of the longer potential
lifetime of BEBs due to better technology.
Charging Infrastructure
The average cost for charging infrastructure is
121,000 yuan per bus. As with the bus subsi-
dies, government subsidies for charging
stations make it a profitable business. On
average, a charging station operator can break
even in about five years, considering only bus
charging. If the charging station operator
broadens its business to provide charging for
other vehicles and ancillary services, the
business could become profitable sooner or
without subsidies. Land availability for the
installation of charging stations remains one of
the key issues in Shenzhen and requires the
careful planning and negotiation with the
municipality. This should not be an after-
thought but a key consideration during the
planning phase to avoid delays and service
disruptions.
Environmental Benefits of
Electric Buses
Electric buses have a high emission reduction
potential for greenhouse gases as well as for
air pollutants. The life cycle GHG emission of
an electric bus is only about half of the emis-
sion from a similar diesel bus in Shenzhen.
The SZBG reduces about 194,000 tons of
carbon dioxide equivalent per year because it
has electrified its bus fleet. In addition, the
emissions of CO, VOC, PM2.5 and PM10 are
zero for electric buses. The only air pollutant
that is higher for BEBs is sulfur dioxide, formed
through the combustion of coal in electricity
generation. While a cleaner power grid will
generate higher environmental benefits even
under a scenario of a grid mix with over 70
percent electricity from coal, electric buses still
compare favorably with diesel buses in GHG
and CAP emissions.
Cost-Benefit Analysis
We observe that subsidizing electric buses
provides strong economic benefits while at the
same time making technology financially viable
for the bus operator, taking the results from the
estimation of environmental benefits and TCO.
Higher subsidies than the economic benefits
are justified at the beginning because of
electric buses being a new technology; but
subsidies should be downscaled and phased
out gradually once the technology gets to
scale. If other benefits from bus electrification
such as noise reduction, passenger and driver
comfortability improvement, grid stability
improvement and easier data collection to
improve bus operation are included, the
economic case for BEBs would only grow
stronger.
