New York in 2022 imposed the largest unfunded mandate on schools in a generation, requiring them to replace their buses with electric models. As the deadline gets closer, the actual cost for local taxpayers is becoming clearer.

Under a state-negotiated price schedule that school districts are encouraged to use, electric buses this year will cost at least $259,000 for smaller models and at least $334,000 for what’s currently the most common type (Type C). Larger transit-style buses will cost at least $412,000.

Conventional buses (using diesel or gasoline) meeting the same state criteria start around $71,000, $134,000 and $158,000, respectively. The state price data allow apples-to-apples comparisons of the costs in 10 subtypes of bus for which both electric and non-electric prices were set, with electric coming in 2.5 to four times more than the lowest-cost gasoline or diesel options (figure 1).

Source: NYS OGS

Those comparisons assume the lowest-cost models for electric are available: for instance, prices on electric models go as high as $388,000 for Type C and $452,000 for Type D while conventional model prices tend to vary less among similar models.

Bus prices in every category and fuel type rose in nominal dollars compared to the state’s 2017 price schedule, driven by rising labor and commodity costs (particularly steel). Conventional Type C buses prices jumped an average of about $46,000, to about $140,000 (49 percent), while the one category of Type C buses priced in both years (a 28-seater) climbed from $308,616 to $334,467 (8 percent). On an inflation-adjusted basis, that was a small decrease in cost for electric, but still a premium of nearly $200,000.

That premium is expected to decrease as the market develops and battery technology matures but it’s not clear that will happen in time for New York to avoid paying the excessive cost of being an early adopter. As state energy officials put it: “There is an expectation that prices of electric school buses, like those of most new technologies, will decline significantly,” they wrote in last year’s “roadmap” for bus electrification, “but the timing is uncertain.”

Looking at the differences in prices, electric replacements will cost New York schools and bus companies at least $189,000 more (for the smallest buses) and at least $255,000 more for largest buses. Assuming districts and vendors bought the lowest cost electric bus in each size category as opposed to the lowest cost gasoline or diesel unit, the cost of the mandate would be $8.9 billion for the buses alone.**

Schools are eligible for a limited amount of assistance from the state and federal governments. For instance, the state is borrowing $100 million to help cover electric bus costs, and the federal government is issuing a $7,500 tax credit (or, for schools, grant) for each bus purchased in addition to an EPA program paying for a small number of buses. But all told these would cover only about 10 percent of New York’s compliance costs as they stand today.

That doesn’t include the costs of building charging capacity, which for some districts and companies will require upgrades to their utility service. According to state energy officials: “Costs vary greatly, from as low as $5,000 for a “Level 2” charger to upwards of $100,000 for a “Level 3” fast charger.” One Central New York district (Marathon) was awarded $60,000 by the EPA in 2022 for each of three charging stations. Bethlehem school district in 2021 estimated it would cost $1.9 million for 25 stations, or $74,200 per charging station.

Depending on where electricity prices and fuel prices are, districts could see a drop in their operating costs as they switch from buying gasoline or diesel to electricity. Electric vehicle propulsion systems also require less maintenance than internal combustion engines. But the related savings would be dwarfed by the capital costs from buying the vehicles and connecting them to the grid.

It remains to be seen whether electric-bus manufacturers will achieve the sort of scale New York is counting on to bring down costs (and to deliver 45,000 units in the next 12 years). Given its history of setting and then missing environmental targets (the state reached its 2015 renewable energy target in 2022), companies that would expand their capacity must make potentially costly assumptions about whether New York will indeed slam the brakes on conventional bus purchases in less than four years.

The high estimated cost—and lack of an official cost estimate—are signature features of New York’s various efforts to further reduce its greenhouse gas emissions, which by the state’s own superficial calculations will add hundreds of billions of dollars in gross costs for people living and doing business in the state over the next three decades.

New York’s bus-electrification push embodies another characteristic trait by dismissing less costly alternatives, such as fuel-battery hybrid buses which have lower, but not zero emissions. Hybrids were omitted from this round of price-setting, but seven years ago, the state had worked out prices for hybrid buses ($63,000) that were closer to gas-powered buses ($45,000) than to electric models ($227,000). Hybrids also wouldn’t require new infrastructure or further stress the electricity grid.

Finally, charging ahead with another “nation-leading” policy means New York schools will pay more than necessary for products that are eventually expected to come down in cost significantly in pursuit of an arbitrary goal state officials are likely to miss—but expect praise for having set.

**Type B buses are not available in electric models. This assumes these are replaced with an even mix of smaller Type A and larger Type C units.

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