2008 Bus Survey

Lisa Callaghan Jerram

Fuel Cell Today
December 2008
2008 BUS SURVEY

Contents
1. Introduction
2. Market developments in 2007 and 2008
2.1 Annual units produced
2.2 Cumulative units produced
2.3 Technology choice
2.4 Region of adoption, 2003-2008
2.5 Region of manufacture, 2003-2008
3. Market dynamics
4. Anticipated highlights of the coming year

Graphs
Figure 1: Annual units produced
Figure 2: Cumulative units produced
Figure 3: Region of adoption
Figure 4: Region of manufacture

Glossary / Definitions
APU – auxiliary power unit
CARB – California Air Resources Board
CUTE – Clean Urban Transport for Europe
EC – European Commission
ECTOS -- Ecological City Transport System
EU – European Union
JTI -- European Fuel Cell and Hydrogen Joint Technology Initiative
NRW -- North Rhine-Westphalia
PEM – Proton exchange membrane
R&D – research and demonstration
SOFC – Solid oxide fuel cell
STEP – Sustainable Transport Energy for Perth
UNDP GEF -- United Nations Development Programme Global Environmental Fund
ZEB – Zero Emission Bus

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1. Introduction

The fuel cell bus market is in a transitional period. In the two years since the last Fuel Cell Today bus survey was pro-
duced, there have been fewer than 15 new fuel cell buses introduced, and there are actually fewer total buses in op-
eration worldwide, since most of the HyFleet:CUTE program’s buses have concluded demonstration service. What
we are seeing now are several development pathways happening simultaneously. On the one hand, we are seeing
a ramping up of bus orders at a small number of transit agencies, with single agency procurements of as many as
20 buses for delivery in the 2009 to 2010 timeframe. Fuel cell and bus companies are taking what they learned from
the last several years of demonstrations to develop the next generation of fuel cell transit systems; some are pursu-
ing these new procurements and some are waiting to introduce new product based on their own internal schedule.
At the same time, governments are continuing to fund R&D projects and demonstrations to spur development and
testing of new fuel cell systems and drivetrain configurations that can help fuel cell buses meet transit’s demanding
performance requirements. So, there is a bit of a mixed message on the path toward commercialisation, with some
parties moving to the next stage of higher volume deployments, and others continuing R&D and demonstration
with small numbers of buses.

2. Market developments in 2007 and 2008

2.1 Annual units produced

In 2007 and 2008, only a handful of new fuel cell buses were delivered or entered into service. These include the
fifth Van Hool 12-m (40-ft) bus placed into demonstration in the US, the first outside of California; the first fuel cell
bus in Brazil, under the United Nations Development Programme; two 7-m (22-ft) buses with automotive fuel cells
being tested by US universities; two additional Hyundai buses in South Korea; and various small-size bus platforms
using Hydrogenics stacks in Europe. These buses are all prototypes being deployed for multi-year demonstration
periods.
35

30

25

20
Units

15

10

0
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Year

Figure 1: Annual new units produced from 1994 through 2008

As Figure 1 shows, the production of new units in the past two years is slightly lower than the annual numbers have
been since 2003, when production peaked with Daimler’s introduction of its 33-bus fleet for the European CUTE and
ECTOS and Australian STEP programmes. This irregular growth rate is not surprising given that this application is in
a pre-commercial phase. Production of new units is still being driven largely by government policies and funding,
and much of the support is still targeted to single prototype development or very small fleets. Several larger pro-
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curements are underway, however, and in the next three years we will see slightly ramped up production volumes
for 12- and 20-bus procurements. There is not any single production line as large as the CUTE fleet planned as of yet,
but, unlike that fleet, these large procurements are for one operator, rather than being dispersed at multiple sites.
Nevertheless, at this stage of development, buses are still essentially hand-made in small batches, and this will keep
manufacturing costs high. (For example, while purchase prices vary widely based on vehicle specifications, the Van
Hool bus delivered to Connecticut Transit in 2007 cost US$ 2.4 million. Encouragingly, the price was 25% lower than
the price for the comparable bus delivered to AC Transit just two years earlier.)

2.2 Cumulative units produced

As Figure 2 shows, cumulative production levels did not increase much in the past two years, and the total number
of buses produced worldwide remains relatively low at around 115. Besides reflecting the fact that buses are being
produced primarily at the behest of government funded programmes, this low number is indicative of how small
the transit bus market is (all fuel cells buses produced to date have been full size or shuttle bus transit models,
not motor coaches) compared to the passenger vehicle market. Annual global transit bus demand hovers around
50,0001 compared to 46 million2 for light duty vehicles. This could be a barrier to commercialisation since low levels
of market penetration may not provide the economies-of-scale needed to reduce manufacturing costs to make fuel
cell buses competitive with conventional technologies. For example, annual transit bus demand in the US averages
around 4,000 - 5,0003; if fuel cell buses initially capture 1% of new purchases, as happened when in the early com-
mercial phase of compressed natural gas buses, this equals only 40-50 buses a year. Fuel cell manufacturers have
indicated that production of 100 units will be needed to start seeing major cost reductions.

140

120

100

80
Units

60

40

20

0
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Year

Figure 2: Cumulative new units produced from 1994 through 2008

It should also be noted that this chart represents all fuel cell buses produced, not the total number in service. Since
all fuel cell buses to date have been prototype or demonstration models, they are typically put into service for a
short, pre-determined evaluation period not the seven to 12 years that is standard for transit buses. Most have been
run for one to four years and then been decommissioned. (Indeed, there appear to be diminishing returns from
operating these pre-commercial fuel cell systems more than a few years; since the technology is continually being
modified to advance toward commercialisation targets, a fuel cell system can become obsolete fairly quickly.) As a
result, the worldwide fleet of fuel cell buses in operation has actually declined in some years. The biggest drop-off
occurred with the removal of most of Daimler’s fleet after the conclusion of the HyFleet:CUTE demonstrations in
2007 and 2008 (Hamburg continues to run six buses). While Fuel Cell Today does not have an exact total of buses in
service as of 2008, we estimate it to be only around 35. Announced vehicle introductions will increase the operating
fleet by over 150% by 2011, although some current vehicles will be removed from service (e.g., AC Transit’s current
Van Hool buses), and many more are anticipated through government programmes such as the European Fuel Cell
and Hydrogen Joint Technology Initiative (JTI).
1 “The global market for buses, 2000-2010,” Ealey et al, published by Business Economics.
2 International Organi2ation of Automobile Manufacturers 2005 data
3 American Public Transportation Association’s 2008 Public Transportation Fact Book.
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2.3 Technology choice
PEM technology reigns supreme in the bus market, as it does with light duty vehicles. Fuel Cell Today is not aware
of any plans to produce a non-PEM fuel cell for integration into a bus platform, not even for APUs along the lines of
the SOFC APU that BMW is reported to be planning for its hydrogen ICE 7-series.

2.4 Region of adoption, 2003-2008

Since so few buses were shipped in 2007 and 2008, this section summarises the regions of adoption over the past
five years. This period marks the first time that a large number of buses were placed into extended service as part of
multi-city demonstration programmes, as opposed to isolated prototypes. The next generation of fuel cell buses to
be introduced in 2009-2010 will feature advancements in performance, durability and cost improvements made as
a result of lessons learned from the 2003-2008 generation of buses.

As Figure 3 shows, Europe has taken the lead on promoting fuel cell bus deployment. There are around 17 European
cities that have demonstrated buses in the past five years as the result of government-funded programmes. The ma-
jority were participants in the ten-city CUTE and ECTOS programmes funded by the EU. Other key programmes are
the EC-funded HyChain Project, which supports deployments in Germany, Spain, Italy and France, and the German
state of North Rhine-Westphalia (NRW)’s Fuel Cell and Hydrogen Network project.

Asia’s activities have been focused in Japan, China and South Korea. In Japan, the only reported activity is Toyota’s
eight Hino buses; this fleet was introduced in 2003 and 2005, and has been demonstrated in a variety of settings,
mainly for short-term service rather than multi-year service as has been the case in Europe and the US. China has a
two-pronged approach to promoting fuel cell buses. First, the country is participating in the United Nations Devel-
opment Programme and Global Environmental Fund (UNDP GEF) Fuel Cell Bus Programme to deploy buses in the
developing world. In the first phase of this activity, Beijing became one of the HyFleet:CUTE cities and took delivery
of three Daimler buses. China is also promoting a domestic fuel cell bus industry through its National High Technol-
ogy Development Plan (the “863 plan”). This programme has funded development of two generations of locally
produced fuel cell buses in the last five years. Beijing’s Tsinghua University is the programme lead, with the PEM
fuel cells being developed by the Dalian Institute of Chemistry and Physics and the Shanghai Sun Li High Technol-
ogy Company. South Korea has deployed four buses from Hyundai, with the support of the government’s National
RD&D Organisation for Hydrogen and Fuel Cells.

Rest of World 5%

North America 15%

Asia 27%

Europe 53%

Figure 3: Fuel cell bus deployment from 2003 through 2008

In North America, California is the locus of fuel cell bus activity due in part to the California Air Resources Board
(CARB)’s regulation requiring zero emission bus deployment but also to the state’s long-standing role in pushing the
envelope on new environmental technologies. Outside California, buses have been deployed at the transit agency
in Hartford, Connecticut; at a US military base in Hawaii; and at universities in the states of Delaware and Texas. All
of these programmes are supported by federal and/or state funding. Canada did not see any significant fuel cell bus
deployments in this period, but rather is gearing up for the big 20-bus deployment in British Columbia in 2010.

Outside North America, Europe and Asia, there continues to be little fuel cell bus activity. At this stage, fuel cell
buses still need substantial government subsidy, and, with the exception of Perth, Australia, governments in the
“rest of the world” regions have not been inclined to spend public funds this way. While air quality is an issue for
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many developing world cities, the preponderance of older, more polluting bus models means that upgrading fleets
to modern, conventional buses has a huge air quality impact at relatively low cost. Moreover, in many of these re-
gions, bus transport operations are privately owned, and operators are much more cost-conscious. The one major
government-funded initiative to bring fuel cell buses to the developing world is the UNDP GEF fuel cell bus pro-
gramme, although this has scaled back significantly. It is still funding buses in Brazil and China, but has dropped
plans for projects in Mexico, India and Egypt. Earlier this year, Sao Paolo took delivery of a Marcopolo bus equipped
with Ballard’s fuel cell engine for a demonstration scheduled to start next year.

2.5 Region of manufacture, 2003-2008

The regions of manufacture breakdown essentially mirrors the regions of deployment. Bus manufacturing tends to
be localised, with cities purchasing from bus companies in their own country or region. Moreover, these projects
are dependent on government funding which typically will be directed to support native industries. However, as
Figure 4 shows, Europe has an even higher percentage of fuel cell bus production than it does deployments. There
are two reasons for this. First, Beijing and Perth were both partners in the CUTE/HyFleet:CUTE programmes and de-
ployed Daimler fuel cell Citaros. Second, in the US, the biggest fleet of fuel cell buses are from Belgian bus company
Van Hool. The procurement was driven by AC Transit, which selected Van Hool for its fleet, and then SunLine Transit
and Connecticut Transit leveraged their fuel cell bus procurement off of AC Transit’s. As a result, few fuel cell buses
have actually been produced in North America. This will change in the next two years as the BC Transit 20-bus fleet
is produced by Canadian company New Flyer.

Rest of World 1% North America 9%

Asia 23%

Europe 67%

Figure 4: Fuel cell bus region of manufacture from 2003 through 2008

3. Market dynamics

As already noted, the fuel cell bus market has been in a transitional phase over the last two years. Although there
have been some noteworthy new deployments, most activity in this application is going on behind the scenes or in
the form of announced procurement plans and government funding schemes. We will see these activities coming
to fruition starting in 2009 and 2010.

In terms of technology developments, we are starting to see some diverging strategies regarding the size and de-
sign of the fuel cells systems being introduced or planned. The majority of demonstration buses to date have been
full size with fuel cells as the primary propulsion. In the last two years, there have been more buses incorporating
smaller modules from automotive or specialty vehicle applications adapted for transit usually in smaller chassis. Hy-
drogenics has secured a niche adapting its small (under 20 kW) modules to power minibuses or as APUs and range
extenders. Toyota has adapted its light duty fuel cells for its transit application, integrating two 90 kW modules and
nickel metal hydride battery into a hybrid drive system for its 10.5 m Hino buses. And, although Ballard is currently
focused on the next version of its heavy duty engine, it was asked to provide its 19 kW automotive fuel cells for two
7-m shuttle buses in use as research tools at US universities and automotive fuel cells for a 130 kW system used in
the Marcopolo hybrid drive for Brazil.

By contrast, UTC Power, one of the dominant players in this market, is primarily focusing its transit fuel cell R&D on
modules that meet the demands of the full-size transit vehicle market. Based on data from current demonstrations,
UTC has already incorporated a new version of its 120 kW PureMotion system in the five Van Hool buses to address
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stack degradation issues, and the company is currently developing its next generation 120 kW fuel cell. The fuel cell
warranty can be extended up to 10,000 hours, dependent on the fuel cells meeting certain performance milestones,
a major advancement over the 4,000 hour warranty on the current PureMotion fuel cells, and a big step toward the
2015 commercialisation goal of 20,000-hour stack life set by the Hydrogen Bus Alliance.

Another dominant player, Ballard is developing its next generation engine, the HD6, to be deployed in the BC Transit
and London full-size bus fleets in 2010. The HD6 will have a 75 kW and 150 kW module that Ballard says it will sell
as a “plug and play” device that can be integrated into a range of hybrid fuel cell platforms. This would be a big step
toward making fuel cells a commercial product that can be sold “off the shelf” and incorporated into multiple bus
chassis, as is the case with conventional engine manufacturers. According to Ballard, the HD6 will have a warranty
of 12,000 hours or five years.

Daimler has been working on its next generation fuel cell transit bus while winding down the HyFleet demonstra-
tions. Reportedly, the company will demonstrate a new prototype in 2009. It will have a hybrid drive equipped
with two fuel cells used in Daimler’s B class light duty vehicles. We can expect to see more manufacturers looking to
leverage their investment in low power fuel cells for the transit market.

We are also seeing some new players enter the field, as well as new drivetrain and energy storage configurations,
through the US National Fuel Cell Bus Program. This $49 million programme is funding development of 11 new
buses. In addition to UTC, Ballard, and Hydrogenics, technology participants include Nuvera, which is providing an
82 kW fuel cell; BAE Systems, which will integrate a small fuel cell APU into its hybrid bus drivetrains; and GE, which
is developing a fuel cell system using advanced batteries. When the results of these on-going R&D activities are
unveiled in the next two years, it will be interesting to compare the “return on investment” of this $49 million invest-
ment spread across multiple bus platforms against BC Transit’s comparable investment into a single, 20-bus fleet.

While technology development is happening behind the scenes, there have been several high profile procurement
announcements. This year, AC Transit signed a contract with UTC for eight of its new generation fuel cell systems
and an option for 13 more. The agency will begin operating 12 new Van Hool buses integrated by the Belgian bus
company with the new UTC system. These are being deployed to comply with the new round of advanced fuel cell
bus demonstrations mandated by CARB. To comply with the state mandate, the five affected transit agencies are
partnering to fund deployment of the 12 buses at AC Transit.

Plans for BC Transit’s ambitious fuel cell bus procurement have continued apace, with the agency announcing the
awards for the fuel cell bus and infrastructure contract in 2007. As much as possible, BC Transit is attempting con-
duct this bus procurement as it would a conventional one, specifying a standard vehicle warranty as well as high
reliability and performance standards (for example, the bus is expected to meet 85% availability). The bus contract
was awarded to New Flyer, which will use ISE Corporation to integrate Ballard’s new HD6 fuel cell into the hybrid
drive train. Contracting directly with the bus company is another key step toward commercialisation as this is the
standard arrangement in transit procurements. In another positive sign for the maturation of this industry, Ballard
signed a five-year agreement with New Flyer to supply fuel cell modules for use in New Flyer’s shuttle buses, with an
eye toward submitting bids for Canadian bus procurements.

Looking outside North America, China issued an RFP for three to six new fuel cell buses under Phase II of the UNDP
GEF programme. The buses will be demonstrated in Shanghai for two years, including at the 2010 World Expo. Un-
like Phase I, which used Daimler-Ballard buses, these are likely be domestically produced as China seeks to build
its fuel cell expertise. Elsewhere in Asia, there were no major announcements in Japan, as Toyota is continuing to
demonstrate its older fleet of Hino fuel cell buses through the government-funded Japan Hydrogen and Fuel Cell
demonstration program. Most of the government’s substantial support seems directed toward light duty vehicles,
and, outwardly at least, Toyota seems mainly interested in pursuing light duty fuel cell vehicle development and
leveraging this into the bus applications. South Korea has a national R&D Programme for Hydrogen and Fuel Cells
which will continue to drive fuel cell bus adoption over the next several years.

London’s high profile effort to procure ten hydrogen buses – 5 fuel cell and 5 hydrogen ICE – is continuing, having
been spared the fate of light duty hydrogen vehicle procurement, which was scrapped by the new mayor. Fur-
ther procurements in Europe will be spurred the Fuel Cell and Hydrogen Joint Technology Initiative (JTI) launched
this year. This massive programme, which will see investment of 470 euros by government and industry through
2013, includes a fuel cell bus demonstration component. Other programmes working independently on in col-
laboration with these efforts are happening across Europe like HyRamp, HyChain, and the Scandinavian Hydrogen
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Highway. Germany will continue to be a centre for fuel cell activity in Europe with several federal and state fund-
ing programmes. The National Innovation Programme supports “lighthouse projects” including some fuel cell bus
demonstrations, and the North Rhine Westphalia fuel cell programme announced it would unveil an articulated bus
equipped with Nedstack fuel cells next year.

There are also two forward procurement activities underway that, if successful, could have a major impact on fuel
cell bus adoption in the next several years. The Hydrogen Bus Alliance was launched in 2007 to bring together cities
that were willing to make a fuel cell bus purchase commitment. To date, ten cities or regions have joined. The goal
is to demonstrate demand and to share information on procurement activities. The Clinton Climate Initiative is also
pursuing a joint forward procurement among the C40 cities.

In terms of future adoption in North America, outside the BC Transit fleet, California will continue to be the centre
for fuel cell bus activity because of the CARB rule requiring that 15% of new bus purchases be zero emission buses.
Around half of the transit agencies affected by this rule must begin by 2011, the others by 2012. The rule stays in
effect through 2026. It will be important to watch CARB’s bi-annual review of the zero emission bus rule next year to
see whether the agency could decides to postpone the purchase requirements as they did in the last review.

Finally, an intriguing announcement came out of India late this year. The national nuclear agency has developed a
prototype fuel cell system for buses. Reportedly, the agency will seek to work with Tata Motors to integrate the fuel
cell into a bus platform. The government has ambitious plans for deploying one million hydrogen vehicles by 2020.
So far there are only news reports on this item, but it could be a major breakthrough for fuel cell adoption outside
the developed world regions if the project is successful.

4. Anticipated highlights of the coming year

• In the US, several of the FTA funded buses will begin testing and evaluation. These projects will feature new
players in the fuel cell bus market, as well as new hybrid drive and energy storage configurations.
• The next fuel cell demonstration under the CARB Public Transit ZEB rule is set to begin in January 2009, with 12
buses at AC Transit.
• In mid-2009, CARB will reviews the status of fuel cell bus technologies and determine whether to amend its rule
requiring that 15% of new bus purchases be zero emission beginning in 2011.
• BC Transit will continue to prepare for the launch of 20 New Flyer buses equipped with Ballard’s new HD6 mod-
ules, in time for the 2010 Winter Olympics. This will be the biggest single agency fleet ever launched.
• Daimler will unveil its next generation fuel cell bus, the next generation of Van Hool buses for California, using
UTC fuel cells, will be launched, and Nedstack will enter the fuel cell bus market with an articulated bus powered
by Nedstack modules.
• In the rest of the world, Brazil will begin operating its first fuel cell bus in Sao Paolo while India plans to introduce
a new fuel cell bus prototype.
• Keep an eye out for new bus projects announced through programmes like the JTI and for potential forward
procurements schemes from the Hydrogen Bus Alliance or the Clinton Climate Initiative.

About the author

Lisa Callaghan Jerram specialises in transportation applications, and has over ten years experience in analysing the
progress of transportation fuel cells toward commercialisation. Based in North America, Lisa also focuses on legis-
lation and regulations at the state, regional and national levels, and fuel cell activity in Latin America. Lisa can be
contacted on lisacallaghanjerram@fuelcelltoday.com

About Fuel Cell Today

Fuel Cell Today is the leading organisation for market based intelligence on the fuel cell industry. Covering key
trends and developments in industry and government, Fuel Cell Today provides relevant, unbiased and objective
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