The electric bus market is projected to grow from USD 23.80 billion in 2025 to USD 59.60 billion by 2032, at a CAGR of 14.0%. Government subsidies and funding from local and national transit agencies make large-scale electric bus adoption financially sustainable worldwide. This shift is further boosted by progress in advanced battery chemistries and faster charging technology, which have extended driving ranges and reduced dependence on mid-route charging breaks. Although there are still a few challenges, a significant challenge is the need to upgrade power grids and bus depots to handle fast charging. Also, constant stop-and-go driving wears out batteries faster and creates heating issues, which can raise long-term costs for bus operators.

Driver: Growing demand for green vehicles to lower fleet-level emissions

The push for greener public transport is driving strong demand for electric buses, as governments and cities prioritize fleet-level emission reductions. Strict emission targets in the EU, funding programs in the US and LATAM, and large-scale initiatives in Asia and Africa are accelerating the adoption of green vehicles. OEMs such as BYD and Yutong are supporting this shift by offering cost-competitive, localized solutions. By enabling measurable reductions in CO2 and NOx per passenger-kilometer compared to diesel and CNG fleets, eBuses are helping agencies meet climate action goals. Additionally, various government incentives/subsidies cover up to 85% of the upfront costs. This policy-driven momentum positions electric buses as the most effective pathway to achieving zero-emission transit while maintaining favorable operating economics.

Opportunity: Advancements in Battery Technologies

Advancements in battery technology are creating significant opportunities for the electric bus market by making vehicles more practical, cost-effective, and widely adoptable. Breakthroughs in sodium-ion batteries, such as CATL’s upcoming Naxtra in 2025, offer a sustainable and affordable alternative to lithium-ion, with comparable energy density, longer lifespan, and higher safety, ideal for urban and entry-level transit systems. At the same time, solid-state batteries are being developed, which promise safer operations, faster charging, and nearly double the energy density, with leading manufacturers like Mercedes-Benz (Germany) already preparing for road trials with their eCitaro electric bus equipped with solid-state batteries. Additionally, the newest generation of NMC4 batteries enhances range and efficiency through higher energy density and prismatic cell designs, supporting new models and retrofitting.

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Europe is projected to be the fastest-growing market for electric buses.

Europe is projected to be the fastest-growing market for electric buses during the forecast period. According to IEA, the region recorded 15% growth in sales in 2024, raising its share of global electric bus sales to over 10%, coming second only behind China. The UK had the highest sales for electric buses in the region, with around 2,000 electric buses sold in the country in 2024. Sales of electric buses in France and Germany were ~700 and ~1,100 units, respectively, for 2024. These three countries contributed more than 65% of the total electric bus sales for the region in 2024. Government programs highly support these sales of electric buses; for instance, the UK’s Clean Bus Fund and ZEBRA2 scheme are supporting large-scale adoption of electric buses, where around 1,200 electric buses were to be procured for ~USD 580 million. Similarly, in Germany, the federal government has committed USD 1.45 billion in 2024 to cover up to 80% of vehicle costs for zero-emission buses and 40% of charging infrastructure expenses. Other than this, Germany and the UK offer significant subsidies covering up to 80% of the purchase cost under programs such as Germany’s National Electromobility Development Plan and the UK’s Ultra-Low Emission Bus Scheme.

RECENT DEVELOPMENTS

• July 2025: BYD commenced an expansion of its electric bus and truck manufacturing plant in Komárom, Hungary. The new 29,000-square-meter facility is expected to triple production capacity to over 1,000 vehicles annually. This plant will create more than 600 jobs and enhance Europe’s supply of zero-emission public transport solutions.
• July 2025: Yutong launched its new-generation battery electric intercity bus, the IC12E, at the UITP Summit 2025 in Hamburg, Germany, highlighting its commitment to eco-friendly transportation. The IC12E is explicitly designed for the European market, offering a maximum 610-kilometer range under SORT2 conditions.
• July 2025: Yutong delivered 110 customized C13PRO premium coaches to Aramco in Saudi Arabia. These coaches were specially engineered to perform reliably in the region’s extreme desert climate. They feature advanced cooling systems, intelligent safety technologies, and luxurious, business-class interiors designed for comfort and connectivity.
• June 2025: Zhejiang Geely Holding Group launched the U12M at the Hong Kong Auto Expo. This would be Geely’s first methanol hybrid city bus, targeting public transport in Hong Kong with sustainable powertrain technology.
• March 2025: Volvo secured a major order for 106 electric buses from Svealandstrafiken in Sweden in 2024. This included 60 Volvo 8900 Electric intercity buses and 46 Volvo 7900 Electric articulated city buses, with deliveries starting in 2025–2026 and operations expected by early 2027.
• February 2025: Volvo Buses secured its first electric bus order from Go Ahead (UK), the largest operator of bus services in London. The company will add 25 Volvo BZL Electric single-deck buses to its fleet later this year.
• January 2025: Thomas Built Buses, a subsidiary of Daimler Trucks, launched the second-generation Saf-T-Liner C2 Jouley battery-electric school bus. The bus featured a new 219-inch wheelbase that accommodated up to 60 passengers. It would be powered by the advanced 14Xe eAxle from Accelera, with a 246 kWh battery enabling a range of up to 150 miles and acceleration from 0-60 mph in 49 seconds.

Key Market Players:

The report profiles key players such as BYD Company Ltd. (China), Yutong Co., Ltd. (China), Xiamen King Long (China), CRRC Corporation Limited (China), and Daimler Truck AG (Germany). These companies adopted new product development and supply contract strategies to gain traction in the electric bus market.

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