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Converting ICE buses to battery-electric/hydrogen in the light of the BMDV funding freeze
Der Rote Renner asks experts about the economic viability of retrofitting vs. new purchases.
Guest article by Sebastian Glinski, deputy chief editor of Der Rote Renner.
Funding for buses with alternative drive systems by the Federal Ministry of Transport (BMDV) has ended following the third round of subsidies in early 2024. While previously approved projects will continue to be financed, no further government funding programmes are planned for the foreseeable future. Funding previously included both the acquisition of a new vehicle and conversion of an ICE bus to a battery-electric or fuel cell drive. Against this backdrop, Der Rote Renner asked utility vehicle retrofitting companies and eMobility experts about their views on the economics of retrofits vs. new acquisitions, and on future market demand.
_xxxldesk43.jpg "A converted red MAN diesel bus of the DB Regio subsidiary Autokraft in action. The sign reads ’Now Electric’.")
As part of the PilUDE project a MAN diesel bus of the DB Regio subsidiary Autokraft was converted to battery-electric. Mid-2020 the first diesel bus to be converted to battery-electric in Germany entered regular service on various routes around Niebüll in Schleswig-Holstein.
Converting diesel buses to battery-electric
As Andreas Pfeffer, managing director of ’to zero electric vehicles GmbH’ sees it, converting a diesel bus to battery-electric is a good alternative to a new acquisition. In his view it is cheaper, more sustainable, quicker and has environmental benefits. Prior to the freeze, a retrofit estimated to cost 270,000 euros would receive 80 per cent funding. However, according to Pfeffer one of the problems was that many retrofits received no funding. In that sense one could say the funding programme impeded the retrofitting business.
_xxxldesk43.jpg "View of the battery compartment on a retrofitted public transport bus.")
View of the battery compartment on a converted bus, part of the PilUDE project. The retrofitting concept is the brainchild of ‘I SEE Electric Buses GmbH’ . Andreas Pfeffer was one of two managing directors of ‘I See Electric Buses GmbH’.
Converting ICE buses to hydrogen power
Converting to hydrogen is possible too, either to a fuel cell and battery-equipped vehicle, or from fossil fuels to hydrogen on an internal combustion engine. According to Jürgen Nadler, chief marketing officer of Keyou GmbH in Munich, the latter option has the advantage of requiring no battery and being able to use the existing diesel engine. The tank system, currently a costly item in relation to the whole vehicle, must be retrofitted or replaced. That said, however, volume retrofitting could see the total cost of ownership of hydrogen combustion engines approach that of diesel vehicles. For that reason Nadler expects the funding freeze to create a “whole new ball game" and make bus retrofits an attractive option, although Keyou currently focuses on converting HGVs.
The expert view on converting ICE buses to battery-electric
Dr. Lena Beckmann, director of PSM Battery, eTM & SI at Webasto, points to the new situation retrofitting companies face: “Many companies have now scaled back their battery-electric bus conversions or withdrawn from the market altogether. At Webasto we are seeing a shift towards OEM business, with many vehicle manufacturers now already marketing a wide range of electric buses.”
Maximilian Rohs, director, Infrastructure & Mobility, PwC Germany, expects “the government funding freeze to spark price-cutting among competitors for new electric buses”. At the same time he believes that scaling retrofits will only result in marginally lower prices, which is why the price gap between retrofits and new acquisitions will continue to narrow. There were also other challenges to retrofitting, he said, such as age limits for vehicles when bidding for contracts.
Christina Granitz, project manager and expert on trucks at Berylls Strategy Advisors, sees demand for retrofits as being low. The reason was that “funding addressed the extra cost of acquiring new buses”, which was why “from an operator’s point of view retrofitting offered no financial incentives”. In terms of total cost of ownership, new electric vehicles were the better option as they were more efficient, Granitz said. Government emissions policies meant that manufacturers were being forced to push “clean vehicles” onto the market. She expected retrofitting to produce results only “through the use of CNG and hydrogen in the internal combustion engine”.
Summary
While the freeze in BMDV funding does not mean electric bus conversions are a thing of the past, the result is a “whole new ball game”. While eMobility experts predict retrofitting will remain a niche market at most, retrofitting specialists see better prospects. According to ‘to zero’, which converts vehicles to battery-electric, because funding was previously the exception one could even argue it stood in the way of business, so that orders could now be expected to increase. Keyou, which converts vehicles to hydrogen power, is currently focusing on HGVs, but sees good prospects for buses too. How the price difference between retrofits and new electric buses develops will be decisive, as well as the extent to which transport authorities allow retrofitted buses to join the bidding process.