Proterra Builds Its Case

July 07, 2012

Proterra counts on the long term

The Greenville News | by Rudolph Bell

It’s pretty easy to grasp the environmental argument for buying the buses that startup venture Proterra makes in Greenville.

Since they’re powered by batteries, they don’t pollute. Air pollution, though, isn’t the only thing that transit agencies consider when buying buses.

The cost of the revolutionary electric buses has led to a great irony in Proterra’s story. The city that fought so hard to land the company as an important step in the region’s growth as an international automotive and transportation cluster says it can’t afford to buy them.

Proterra is working hard to push down the price of its bus as it moves production to a mass scale, but at $950,000, the current price is still about double the cost of a diesel.

For the Greenville Transit Authority, that’s too much, absent some help from the federal government, its chairman said. He said the Transit Authority last year used stimulus funds to buy seven diesel buses.

The situation underscores the challenges faced by Proterra, Greenville’s highest-profile startup company, as it strives to bring alternative transportation to a U.S. market addicted to oil.

It’s a different story in Clemson, where the bus system expects the greater up-front cost of four Proterra buses to be balanced over time by savings in fuel and maintenance.

Clemson Area Transit is putting the Proterra buses on the road with the help of a $4.1 million federal grant secured by the city of Seneca, which contracts with CAT for its bus service.

For Proterra, the Seneca deployment provides a chance to build the case for the EcoRide’s value.

That case rests on saving money as well as cutting pollution, said David Bennett, the company’s chief executive officer.

“It’s got to make economic sense and environmental sense,” he said.

Clemson system sees savings

Al Babinicz, CAT president, said he hopes to replace all of the system’s 26 diesel buses with electric buses over time, eliminating emissions entirely.

That will bring big savings in fuel costs, he said.

Also, electric buses have more room for passengers since they don’t need a big engine compartment, and they’re easier to maintain since they don’t require oil changes or some of the equipment that goes in a diesel bus, such as an exhaust system.

Still, the Proterra buses can be used only on CAT’s shorter routes in Seneca and Clemson University since they need to be recharged after 30 to 40 miles, Babinicz said.

He expects the distance that electric buses can travel without recharging to grow as battery technology advances.

And Babinicz sees Proterra’s purchase price coming down as the company continues to fine-tune its product and processes and finds the economies of scale that come with mass production.

“It’s a game changer for the transit industry,” he said about Proterra’s bus.

CAT serves Pendleton, Central and Anderson in addition to Clemson and Seneca. Passengers ride free.

Last year, CAT opened a new headquarters in Clemson with 210 solar panels on the roof and other “green” features.

Babinicz, the new president of the Transportation Association of South Carolina, said he’ll launch the zero-emission service in Seneca as soon as Proterra delivers the buses and two charging stations costing $600,000 apiece.

The company has a year to do that under the $5.4 million deal it recently signed with Seneca in its biggest contract to date.

Proterra’s EcoRide bus passed federal government testing in Pennsylvania, but data about its performance is limited because only 10 have been manufactured so far, according to the company.

Babinicz will carefully monitor how the buses perform in Seneca, as will Proterra itself and a nonprofit organization that will be collecting data for the Federal Transit Administration, the agency that provided the grant to Seneca.

“If the Seneca model proves out a success — and we all expect that it will, in terms of saving money financially — why wouldn’t we replace all of our diesel buses with electric and why wouldn’t Greenville do that?” Babinicz said.

Cutting Upstate pollution

Ben Haskew, president of the Greenville Chamber, said the pollution-free vehicles can only help the Upstate comply with federal ozone standards and avoid being declared a “non-attainment zone” by the Environmental Protection Agency.

If the Upstate slips into non-attainment status, manufacturers could face new costs for anti-pollution equipment, giving them an incentive to put jobs elsewhere.

Haskew said he applauds CAT’s goal to eliminate all bus pollution, as well as recent environmentally friendly moves by the city of Greenville, such as making two electric cars available for rent by the public downtown.

Art Guzzetti, vice president for policy at the American Public Transportation Association in Washington, said he’s not aware of any other transit system with a goal of eliminating tailpipe emissions entirely, though he said there’s growing interest across the industry in alternative fuels.

With natural gas prices low and supplies growing, a lot of transit systems are trying buses fueled by compressed natural gas, he said.

Babinicz said the results in Seneca could have big ramifications for public transit since the best practices of transit systems are scalable, meaning they can be applied to other systems of different size.

“So if it works in Seneca, South Carolina, it will work in Chicago or Philadelphia,” he said.

Greenville's decision

In Greenville, efforts to deploy Proterra buses have been put on hold, said David Mitchell, chairman of GTA, which operates the Greenlink bus system.

GTA applied three times without success for federal funds to buy Proterra buses for expanded service, and Mitchell said it still hopes to deploy the battery-powered vehicles at some point.

“But funding and the cost of those buses and their operations is making it prohibitive right now,” he said.

In 2009, GTA sought $100 million in federal dollars to pay for a regional, rapid-bus system using electric buses. That system would have stretched from Clemson University to Greenville-Spartanburg International Airport and from Travelers Rest to Fountain Inn.

In 2010, GTA asked for $15 million to develop an eight-mile, nine-station line with electric buses that would have linked downtown with the International Center for Automotive Research.

After its second grant application was denied, Mitchell said in remarks at ICAR in early 2011 that GTA would push on and “find a way to operate a Proterra bus in the same community that Proterra buses are manufactured.”

That fall, GTA applied for federal funding again, but its application for $21.7 million to run eight Proterra buses was likewise rejected.

Energy savings

Proterra already knows that Seneca’s energy cost per mile will drop from $1.05 to 18 cents, and it’s hoping to find a 20 percent reduction in maintenance costs, Bennett said.

Quantifying the maintenance savings is important because maintenance costs closely follow fuel costs as a financial concern for transit agencies, he said.

Proterra is already collecting data from Foothill Transit in Los Angeles County, an early customer with three buses in the field, but the buses going to Seneca will have new features.

Those include a new transmission that Proterra will build in house and a new composite body that the company spent a year developing, Bennett said.

Seneca will also be the proving ground for Proterra’s next-generation battery technology, though not at first, he said.

“Seneca’s getting what we call version 1.5,” Bennett said. “There was a base version in 1.0 and this is version 1.5 with a bunch of major improvements, with both cost down and quality up.”

The Seneca deployment will also provide a conveniently located demonstration of Proterra’s product for customers who visit its Greenville plant and headquarters, such as the transit agencies from Denver and Reno that stopped by recently.

Bennett said Seneca’s $950,000-per-bus price covers all the options — including new safety features for doors — for 27 percent less than what Foothill Transit paid.

He said Proterra is working hard to cut the bus price even more, and could probably sell the EcoRide for $650,000 to $800,000 if sales hit 50 to 100 units a year.

“We want to make it a preferred option to buy these vehicles in the transit space and one of the elements is you’ve got to bring the acquisition costs down, not just the operating costs,” Bennett said.

National interest

The Center for Transportation and the Environment, a nonprofit organization in Atlanta, will monitor the use of Proterra buses in Seneca to determine the effect on energy usage and emissions, said director Steve Clermont.

The Atlanta-based nonprofit helps foster alternative fuel and transportation technologies and previously worked with Proterra to develop a bus powered by a combination of batteries and a hydrogen fuel cell.

Clermont said CTE will report its findings in Seneca to the FTA, which wants to know how Proterra’s technology might help transit agencies across the country.

“What we hope to find is that the operational savings over time outweigh the higher up-front capital costs,” he said.

Proterra has reconfigured its manufacturing space in the former Orders Distributing Co. warehouse along Interstate 85 in Greenville to create a new assembly line that Bennett said is more efficient and capable of making 300 buses a year.

The line was designed with the help of GM Ventures, the venture capital arm of General Motors and one of Proterra’s investors.

Five buses were being assembled on the line recently, three bound for a transit agency in Tallahassee, one likely going to Stockton, Calif., and the fifth a special project for General Electric.

Bennett said workers were putting in 58 hours a week to fill the orders and were due for a much-deserved rest during a scheduled plant shutdown this month.

The former Eaton Corp. executive said Proterra has about 130 employees so far and hopes to have 300 next year.

He said Proterra has sold or gotten orders for 19 buses and has open or pending requests for up to 22 more out of California.

For Seneca, the Proterra buses are part of a plan to diversify the economy and help make up for the loss of textile jobs.

Running electric vehicles on the city’s three bus routes will create the first all-electric, zero-emission municipal transit system, a novelty that could draw visitors from around the world, city officials say.

It would dovetail with Oconee County’s emphasis on tourism and a public/private initiative to develop a 110-suite hotel with pool and conference center near the intersection of Highways 123 and 130.

“We do feel like we’re going to attract people globally because we will be the first in the country that’s all-electric,” said Seneca Mayor Dan Alexander.

The 8,300-resident city secured $2 million from Southern Co., the Atlanta-based power company that supplies power to its electric utility, in order to meet federal grant requirements for local matching money.

Seneca has applied for nearly $10 million more in federal monies to buy two more Proterra buses, charging stations for passenger cars, 15 transit shelters with solar panels and high-tech information boards, bike lanes and new sidewalks, according to its grant applications.

Seneca would also use the federal funding to develop a training program for electric vehicle mechanics in a former textile mill the city bought in April for $2.1 million.

The training program, if it materializes, could make Oconee County a producer of the work force needed by the electric vehicle industry and help the county recruit companies in that industry “because we’ve got the talent here,” said Richard Blackwell, economic development director for the county.

The CAT president said he’d like to see zero-emission buses deployed not only across his own system but across the Upstate.

“You’ll always have naysayers on the sidelines saying this will never work, this is ridiculous, this is too expensive, or what have you,” Babinicz said. “But at the end, if (the Seneca deployment) does what it needs to do, it’s a game-changer for the industry, and that’s the exciting part of it, and it’s all right here in South Carolina.”

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