Supplementary written evidence submitted by Switch Mobility (BUS0064)
The below document provides supplementary written evidence, intended to add further context and statistics to support the answers given in the oral evidence by Peter Freedman, Chief Marketing and Sustainability Officer at Switch Mobility, to the Transport Select Committee on June 8th, as part of its inquiry, National Bus Strategy: One Year On.
Zero Emission Bus Funding
To further clarify on the funding provided by the Zero Emission Bus Regional Area (ZEBRA) scheme, the scheme provides funding to meet up to 75% of the difference between the price of the electric bus and its diesel equivalent, and up to 75% of the agreed infrastructure costs. This has been an effective tool in incentivising investment in zero emission buses (ZEBs), however, UK manufacturers have experienced some difficulties with the scheme, including:
- Speed of funding: In the National Bus Strategy, the Government committed to ‘support the purchase of at least 4,000 new zero emission buses’. So far, the Government has announced a total of £270 million in funding towards the ZEBRA scheme. However, there is a significant lead time between funding being allocated to local authorities and operators, and bus purchases being made, and another time gap between an order being placed with a manufacturer and buses going on the road. This means that it is highly unlikely that 4,000 buses will be on the road by the end of this Parliament, even if funding is allocated to their purchase. So far, very few orders have actually been placed with UK manufacturers through the ZEBRA scheme, and this is having a detrimental effect on the order books of all three UK manufacturers.
- Certainty of future funding: In March 2022, the Government announced that 2,000 buses had been funded, through the ZEBRA scheme, funding in devolved nations and other schemes This announcement, and the Government’s funding commitments so far, have been appreciated by UK manufacturers. However, the Government has not yet specified how the remaining 2,000 buses of the Government’s 4,000 bus commitment will be funded. This uncertainty is hampering our ability to develop a short or medium term business plan, and therefore is impeding our ability to commit to further investments in our footprint in the UK. We would urge the Government to detail its funding commitments for the next 2,000 buses as soon as possible.
- UK Content: The UK has a number of successful and credible bus manufacturers, including Switch. Given the requirement to meet net zero targets and support UK manufacturing it would be logical to include a local content requirement for any zero emission buses that are partly or fully funded by taxpayer money. This will reduce the carbon emissions of shipping buses and parts to the UK from non-UK manufacturers and also incentivise investment into green manufacturing in the UK. A potential starting point would be to implement a requirement for 40% local content (by value) and increasing this to above 50% by 2024.
Phase out of diesel buses
To contextualise the discussion around Switch’s proposed phase-out date for the sale of new diesel buses by 2025, we should consider that the average bus has a 15-year lifespan. This means that, with a phaseout date beyond 2025, ICE buses could remain on the UK’s roads well beyond 2040, which threatens the sector’s ability to reach net zero by 2050.
Crucially, as discussed in the evidence session itself, an ambitious phase-out date for diesel buses would also provide UK manufacturers with certainty over the future state of the market, allowing us to form medium term business plans, and justify further investment in the UK. As a UK manufacturer, based in Leeds, Switch is keen to invest in the UK, providing high quality jobs outside of London and the South East, as are the other major UK manufacturers. Switch is considering plans to invest at least £100 million across the UK economy, including the creation of a new factory, to create 2,000 direct jobs. In order to do so, we require long term certainty of the direction of the market, and an ambitious phase out date for non-zero emission buses can provide this. By being able to invest in our UK manufacturing base, Switch and other UK businesses will be able to take advantage of the rapidly growing global EV bus and LCV market, which is projected to be worth around $50bn by 2030, growing at a CAGR of over 25% - thus bringing further growth and employment back to the UK.
Mobility as a Service
To provide further information on Mobility as a Service (MaaS), and its applicability to the UK bus sector:
- At Switch, we believe that MaaS has the potential to revolutionise the bus sector’s push to net zero. MaaS gives the ability to see a bus as an operational cost, rather than a CAPEX asset. You can therefore buy travel by the mile rather than owning the asset outright. This makes access to zero carbon transport more affordable, by allowing operators to avoid the high upfront costs necessitated in traditional ZEB purchases. This is particularly important given the financial constraints imposed by the pandemic.
- MaaS is particularly applicable to the bus sector, as it helps operators to avoid the high upfront cost of zero emission buses and infrastructure investment, but reflects the savings they will make over the total cost of ownership of the bus. Based on our analysis, over a 15-year period each electric bus costs around 8% less to run than a comparative diesel vehicle.
- We would suggest that the Government encourage exploration of MaaS business models in the UK, through initiatives such as the introduction of a MaaS pilot scheme as part of the next round of ZEB funding.