Europe’s Transit Firms Realize China Is The Only Scaled Manufacturer Of Low-Carbon Solutions
In the dark mists of time before COVID, the year 2019, I published a four-part series on the major headwinds facing us as we struggled to decarbonize quickly through 2030. The headwinds were inverted political power with cities at the bottom of power hierarchies due to patterns reasonable hundreds of years ago, the patchwork of regulations that meant many cleantech deployment companies couldn’t share resources across jurisdictions easily, major utility and transit organizations being poorly positioned for transformation, and finally the political challenge that China is the only scaled manufacturer of most of the things we need to decarbonize our economies.
Almost four years have passed, years in which very odd things occurred, including a major pandemic, an attack on Capitol Hill in Washington by seditious conspiracists (who are being found guilty in droves), the illegal invasion of Ukraine by Russia, the European energy crisis, China accelerating even further away from the rest of the world in its ability to deliver cleantech, and increasing anti-Chinese sentiment coming out of Washington as the US realizes that it lost sight of the ball and is starting to realize that it is an empire in decline as China ascends.
None of the headwinds have changed, but there appears to be more recognition of them, and work on at least some of them. And today, mixed news crossed my desk on a key file — electric buses. 42 months ago, China had 430,000 electric buses on the roads of its cities. Now it has 600,000 or so. Outside of China, other countries might have had 100 electric buses if they were lucky.
After 3.5 years, we would expect other countries to have at least broken the 1,000 mark, however arbitrary that number is. However, only a few are approaching 500. China deployed an additional 170,000 electric buses while the best of countries outside of China managed 400 or so each (while acknowledging that they are much smaller). The rest of the world is so far behind China on this that analogies fail me. China lapping the rest of the world in a race implies the rest of the world is actually capable of finding the race track.
Many transit organizations were clueless about how far ahead China was in 2019. I was consulting to local transit organization Translink, and the person responsible for the bus electrification program hadn’t even thought about going to China to learn leading practices or to consider buying Chinese buses. He was sure that they wouldn’t meet the fit, finish, and comfort expectations that people in Canada had in mind. His perception of Chinese urban citizens was stuck in some distant past. Asia development and transformation years aren’t quite as accelerated as internet years, but unless you’ve been there, you don’t realize it. And Chinese consumers and transit riders were among the most sophisticated in the world in 2019. My contact’s parochial disconnect from Chinese reality was far from unusual in the west, shared by many people in every domain I’ve dealt with.
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As I noted regarding transit organizations not being well positioned for transformation, they and utilities are absurdly good operational organizations with spurts of transformation decades apart. They have no staff who are experienced and good at transformation, their organization and management structures are focused entirely on optimizing operations, and they rarely have people who are good at looking up from keeping everything running and their customers served and safe. This is in no way a criticism of these organizations or their staff, but a recognition that we are asking them for absurd amounts of change in short periods of time — it’s not what they are good at, and they need a lot of assistance with it.
Every operational organization has vendors that they work with and trust. They’ve dealt with them, often for decades. They know about each other’s families, and often representatives are friends and confidants. When someone from a transit firm wants to buy a lot of electric buses, they’ll go to that supplier, and that supplier will tell them, sure, we’ve got you. We’ll build amazing electric buses that will satisfy your clients and excite your regulators. We can do this!
And they can’t.
New Flyer’s best year of production was 6,500 buses. It’s the biggest bus manufacturer in North America, the last time I checked. California alone has 100,000 buses on its roads. If New Flyer somehow managed to deliver 6,500 electric buses a year it would take 15 years just for a single US state with 12% of the US population. Even assuming California has more buses because it has bigger cities, it likely doesn’t have more than 20% of the buses in the country, so that implies many decades to get buses electrified in that country.
At the pace of 100 electric buses a year that the leading countries other than China are managing, firms outside of China obviously aren’t delivering 6,500 electric buses annually. At present course and speed, the buses so many people depend upon to get to work, school, shopping, and entertainment will be spewing carbon long after 2100.
And so, back to China’s manufacturers. Yutong is the 800-pound panda bear in the country. (Insert panda grammar joke here.) It had a 37.1% market share in 2019, although many other Chinese companies are now building lots of buses. That’s unsurprising, considering it has ranked first globally for 9 consecutive years and first in China’s bus industry for 17 consecutive years.
And the kind of good news is that at least in Europe, it’s the number one seller of electric buses. Number 2 is Chinese electric vehicle leader BYD in joint venture with Scottish firm Alexander Dennis. Of course, they only managed to deliver 479 and 465 buses to the market for the entire year, tarnishing the silver quite a bit. BYD shows up by itself further down the list, so it’s arguable that it’s actually number one. It’s good news that European transit firms aren’t shying away from China’s scaled manufacturers, but it’s not like anyone is buying thousands of buses. Meanwhile, in 2022, China’s manufacturers sold 138,000 electric buses domestically.
Europe in total bought about 3,400 electric buses in 2022. China bought 138,000, about 40 times as many. Europe’s population is about 744 million, or roughly half of China’s 1.4 billion, but buying 20 times fewer per million people is nothing to write home about, or to celebrate in Brussels, however people in Brussels celebrate. (Probably by writing regulations explicitly designed to annoy Brexiteers while eating excellent cheese and drinking wine. That’s what I would do.)
And Golden Dragon electric buses, part of China’s King Long bus company, is also selling buses in Europe, albeit in 11th place with 133 buses in 2022.
The top two electric bus sellers in Europe are Chinese or China-European JVs. Four of the top eleven firms selling electric buses in Europe are Chinese. About 1,300 of the roughly 3,400 electric buses are really Chinese. 40% of the electric buses sold in Europe in 2022 were Chinese, or were running Chinese drive systems and batteries in Scottish shells.
European transit organizations are doing something right, but they are doing it incredibly slowly. When I first looked at the headlines, I was hoping to be much more impressed than I was after working through the numbers.
This is true across the spectrum of clean technologies. A recent European Commission working document on approaches to strengthening European clean technology manufacturing points out that across all of the required transformational technologies, China holds upwards of 60% of the global manufacturing capacity. This is part of the reason I’m strong on the world working with China. We need it to fight climate change.
To be clear, European and North American bus manufacturers are in deep trouble. They aren’t building nearly as many electric buses as China is, so they are way back on the experience curve, aka Wright’s Law. They know how to build buses, so they aren’t stalled on the route. They don’t have China’s purchasing power parity advantage. The combination of purchasing power parity advantages and Wright’s Law means that western bus manufacturers can only hope for legacy relationships and protectionism to save them. The Alexander Dennis joint venture with BYD is the kind of model to expect, where a Chinese whale forms a ‘partnership’ with a western minnow for political air cover.
Europeans aren’t shying away from Chinese electric buses, they are just adopting them incredibly slowly. Meanwhile, a Nigerian firm has partnered with Yutong to deliver 12,000 electric buses to Nigerian streets in the next seven years. Europe and North America need to give their collective heads a shake.
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