Highland Electric Raises $235M, Lands Biggest Electric School Bus Contract in the US
Electric school buses don’t just eliminate the carbon and pollution emissions of their diesel-fueled counterparts; they also cost less to fuel and maintain over the long haul .
Unfortunately for cash-strapped school districts, the upfront cost to purchase an electric school bus is still more than twice as much as the cost of a diesel bus today. And that’s not counting the cost of new charging infrastructure or the risk that those charging costs may drive a district’s electric bills through the roof.
Highland Electric Transportation says it can remove those barriers for school districts and transit authorities by taking on the financing and management of an EV school bus fleet in exchange for a fixed annual leasing fee. In the past week, the Hamilton, Mass.-based startup has won two votes of confidence in its business model.
The first came last week, with the close of a $253 million venture capital investment led by Vision Ridge Partners with participation by previous investors and Fontinalis Partners, the venture fund co-founded by Ford Motor Co. executive chairman Bill Ford.
The second came this week when Maryland’s Montgomery County Public Schools awarded Highland a contract to supply it with what will be the country’s largest electric school bus fleet. The deal will start with 326 buses to be delivered over the next four years, along with charging systems at five bus depots.
The cost of that service, $169 million, will be spread out over 16 years, and will fit into the existing budget structures for its existing diesel bus fleet, said Todd Watkins, the district’s transportation director. After seven years of budget-neutrality, the contract will end up saving the district money compared to what it could have expected to spend on its existing bus fleet, he said.
And the district won’t be stuck with the uncertainties of what it will cost to install charging stations, pay for the electricity they use or keep the buses running, because all of that is Highland’s responsibility.
While the district did have access to a small amount of upfront electrification funds from the Volkswagen “Dieselgate” settlement, Watkins said he is “not a huge fan of grant-supported pilot programs in any area, because if you can’t sustain it, it’s too risky.”
Highland’s contract — which is backed by terms that will protect the district from liability if the company goes out of business — “takes the risks that I think school districts across the country are not so willing to take,” he said. If all goes well, the program could expand to replace all 1,400 of the district’s school buses over the coming decade and a half.
“We knew eventually that electric buses would become cheaper than diesels, or at least affordable. But what this deal with Highland did was move that time to now.”
Shouldering the uncertainties of fleet electrification