Proterra Scales Battery Leasing Program, Creating $200 Million Credit Facility with Mitsui & Co.
Today Proterra, a leading innovator in heavy-duty electric transportation, announced a partnership with Mitsui & Co., Ltd. (“Mitsui”) to create a $200 million credit facility in support of a battery lease program. Mitsui, a leading Japanese investment and trading company, holds a diversified portfolio of businesses in various sectors, including mobility, infrastructure and renewable energy. The battery leasing credit facility, the first of its kind in the North American public transit industry, is expected to lower the upfront costs of zero-emission buses and put Proterra electric buses at roughly the same price as a diesel bus.
By decoupling the batteries from the sale of its buses, Proterra enables transit customers to purchase the electric bus and lease the batteries over the 12-year lifetime of the bus. As a result of the battery lease, the initial capital expense for the electric bus will be similar to a diesel or CNG bus, and customers can utilize the operating funds previously earmarked for fuel to pay for the battery lease. Additionally, under the 12-year battery lease, Proterra will own and guarantee the performance of the batteries through the life of the bus, decreasing operator risk. The battery lease agreement also provides a performance warranty on the batteries and new batteries at mid-life to help customers ensure they always have plenty of energy to meet their route needs and hedge against future replacement battery costs. This battery lease program removes one of the biggest barriers to electric bus adoption, and transit agencies will now be able to modernize fleets faster and achieve their zero carbon goals sooner.
“We’re seeing innovation both in technology and in businesses around the mobility sector. We are pleased to take an initiative to support the transit industry alongside Proterra, as the company expands its battery lease program to enable the rapid adoption and a broader commercialization of its electric buses,” said Yosuke Matsumoto, General Manager of New Business & Innovation Division at Mitsui. “There is a unique opportunity for markets to provide the necessary capital to accelerate the imminent transition to 100 percent battery-electric bus fleets and reduce carbon emissions.”
In addition to the battery leasing initiative, Proterra and Mitsui have established a program to use batteries from the leasing program in secondary applications after the end of their useful life in a vehicle. Proterra’s E2 battery packs are designed with secondary usage in mind, with simplified integration for easy removal and a form factor that enables repurposing.
“This first-of-its-kind credit facility for public transportation marks a significant development in our evolution to make innovative heavy-duty electric vehicle technology accessible through innovative financing models,” said Proterra CEO Ryan Popple. “Mitsui’s continued support as a trusted partner for this facility will serve as a foundation for the Proterra battery lease program to expand and allow transit agencies across North America to bring clean, quiet transportation to their communities.”
In 2015, the Fixing America’s Surface Transportation (FAST) Act specifically authorized the ability to lease batteries separate from a vehicle. Since then, more than a dozen Proterra customers, including Park City, UT and Moline, IL, are already using or have agreed to use the battery lease program. Park City, UT was the first customer to enter into a battery service agreement with Proterra for a fleet of six Catalyst buses that were funded as part of the 2016 Low or No-Emission Bus Program. Park City plans to lease batteries for its next set of seven Catalyst vehicles in pursuit of its long-term goal of going 100 percent electric.
“We’re thrilled to have been the first to take advantage of Proterra’s innovative battery service agreement in an effort to bring more electric buses to Park City,” said Park City Mayor Andy Beerman. “There is no reason for us to buy bus batteries from this point on.”
Proterra has long been a leader in offering flexible financing options to lower upfront costs of an electric bus to be competitively priced against diesel buses. In addition to battery leasing, Proterra established a bus leasing program, which allows customers to pay for the use of a bus over time, with the option to permanently transition the bus into a fleet at the end of the lease term. Currently four customers are taking advantage of leasing buses, including Jones Lang LaSalle in Chicago and Metropolitan Transportation Authority in New York.
