Hybrid Benefits

Economic Benefits

Compared to a conventional diesel bus, a diesel hybrid bus can save more than 2,500 gallons of fuel per year, representing a cost saving of more than $5,000 per year for each hybrid bus. If fuel costs continue to increase, hybrid savings will also increase. For bus operators facing a choice between natural gas and hybrids, there are several reasons many choose hybrids. The incremental cost of a hybrid bus compared with a natural gas bus is smaller than when a hybrid is compared with a standard diesel bus, as natural gas buses cost about $50,000 more than conventional diesel buses and natural gas fueling station costs about $50,000 per bus fueled. It costs about $1 million to install a natural gas refueling station, with additional maintenance costs after it is activated. Also, natural gas buses generally get lower fuel economy than standard diesel buses, whereas hybrid buses usually get better fuel economy. Finally, many bus operators have experienced high maintenance  expenses with natural gas engines, and on board fueled systems.

These incentives to buy low emission, fuel efficient buses are all amplified by the federal subsidies that are available for bus purchases. More than half of U.S. transit bus purchases are made by transit agencies with federal matching funds administered by the Federal Transit Administration. The same Congressional legislation that allocates billions of dollars in federal highway funds every six years also provides billions of dollars for transit bus subsidies. Every state receives a share of these funds in proportion to its population, and each state then gives its individual transit districts shares of these formula grants. The agencies can then use the federal funds to cover up to 80% of the purchase price of standard diesel buses, plus 90% of the incremental cost of alternative fuel buses, including hybrids. The way this subsidy works can be illustrated as follows:

As indicated by this calculation, the transit agency's share of the cost of a $450,000 hybrid bus is only $80,000. By comparison, if it purchased a conventional diesel bus, its cost would be $60,000 (the $300,000 price minus an 80% subsidy, or $240,000). Therefore, the incremental cost of the hybrid bus to the transit agency is only $80,000 - $60,000 = $20,000.

Therefore, from the transit agency's perpective, it can buy hybrid buses that meet the most stringent emissions standards, and that do not require any unusual or expensive refueling infrastructure, for an increase of only $20,000 compared to its cost of purchasing a conventional diesel bus. Based on expected fuel and maintenance savings of $5,000 to more than $10,000 per year, the agency can generally make back the extra $20,000 within to four years.

The graph below compares the cost of operating a compressed natural gas (CNG) bus with a gasoline hybrid bus. In this example, it was assumed the CNG could be purchased by the transit agency at an unusually low price of 77 cents per gallon in the first year, with annual cost increases f 4%. As indicated, even with the assumed availability of cheap natural gas, the gasoline hybrid bus is more economical to operate over the life of the bus, and the local transit agency  recovers the higher cost of purchasing the gasoline hybrid bus in less than four years.

This comparison does not take into consideration the cost of installing a new CNG refueling infrastructure, which would represent an additional cost for a transit agency that did not yet have a CNG refueling facility in place. The cost comparison does take into account expected differences in maintenance costs, which are generally expected to favor the gasoline hybrid bus.

In addition to the federal FTA subsidy, various states have programs to help heavy-duty vehicle fleet operators, including transit agencies, finance the purchase of alternative fuel vehicles. California's ARB administers its "Carl Moyer Program," which offers grants to fleet operators in proportion to the NOx emissions they achieve by buying alternative fuel vehicles. For a large transit bus purchase, a Carl Moyer grant can be as large as $35,000 per vehicle. Governor Schwarzenegger recently signed legislation making the Carl Moyer Program permanent, following a successful trial period. The State of Texas recently initiated its own two year pilot program, the Texas Emissions Reduction Program, patterned after Carl Moyer. By combining state funding from these types of programs with the FTA subsidy, transit agencies can actually buy hybrid buses for a lower cost than conventional diesel buses.