Why your city is still waiting on e-buses — and how tariffs could make things worse
From supply chains to custom cupholders, here’s what’s holding up the transition
Electric bus manufacturers hit hard by pandemic-era supply chain chaos could soon find themselves pummelled by a trade war.
"The immediate effect of the [U.S. President] Donald Trump tariffs is buses become more expensive overnight," said Josipa Petrunic, the president and CEO of the Canadian Urban Transit Research and Innovation Consortium (CUTRIC).
Petrunic said the highly integrated North American industry could see companies hike prices, leaving cash-strapped Canadian transit agencies with a big problem.
"All of a sudden a city that has only so much money can buy many fewer buses from what it planned," she said.
Cities across Canada are already making difficult choices in the face of intolerably long manufacturing waits, including buying more diesel buses instead.
Manufacturers worry outdated payment models and incredible levels of customization have forced them into a corner, which Petrunic arguing the industry has brought to the point of an "existential crisis."
Hit on both sides
On a November earnings call for NFI Group, owner of one of two main Canadian e-bus manufacturers, CEO Paul Soubry said he wished he had a "crystal ball" — presumably aimed at Trump's Oval Office.
"We're basically concerned, obviously, but not disastrously worried that there's going to be a massive impact," he said.
Any effect would be felt north of the border.
"We don't export a lot out of the U.S., other than in some cases, we'll build some parts that send to Canada," he explained. "The other end, where we build something in Canada, a shell, most of it is used with U.S. steel or U.S. components."
- Canadian businesses already feeling the effects of Trump's steel, aluminum tariff order
- Poilievre says he'd retaliate with matching tariffs on U.S. aluminum and steel
Petrunic predicts a double whammy.
North American integration means that companies would be hit by tariffs on parts that head north to their Canadian factories and then again on completed vehicles sent to American customers.
NFI owns New Flyer. For the other major manufacturer Nova Bus, which closed its U.S. factory in 2023, Petrunic said the risk could be greater.
Waiting for cash
Before the pandemic, the burgeoning industry was dealing well with the massive influx of orders from Canadian and American cities, taking advantage of major financial incentives provided by higher levels of government.
- Toronto is buying over 300 new electric buses with help from the federal government
- New Flyer to expand electric bus production in Winnipeg, creating 250 jobs
Then everything changed.
Unpredictable kinks in the supply chain — including when a shipping vessel became locked in the Suez Canal — were coupled with pandemic limits on factory workers.
It takes tens of thousands of components to make an electric bus and the delay of even one part can stymie a whole project.
Manufacturers ended up carrying millions in costs through months of delays, since contracts allow cities to pay all at once after a bus is delivered and fully tested.
WATCH | What it takes to make a transit garage electric bus-ready:
Begging and pleading
At a conference held by the Canadian Urban Transit Authority last fall, representatives from Nova Bus and New Flyer made a plea for understanding to cities — outlining the potential cost of the status quo on an industry still recovering.
"We lost half a billion dollars over three years. We refinanced our business eight times during that time. We begged and pleaded for price adjustments, but our contracts today don't include those types of conditions," Christos Kritsidimas, external communications at Nova Bus, told agencies.
"Tell me where you can go order something that's engineered to order and custom, and not put a penny down," he added.
Stephanie Laubenstein, sales and business development director at New Flyer, said the payment model is a holdout from times when a diesel bus could be delivered in six months.
E-buses take up to four times longer.
During that troubled period, transit agencies were having their own issues. Some opted to put plans to go green on hold, which Kritsidimas said effectively starved the industry.
WATCH | How to avoid a public transit 'death spiral':
Promoting the 'vanilla bus'
Then there's the challenge of designing a whole new vehicle with every order.
Zero-emission buses come with long lists of customizations that are non-negotiable for transit agencies — everything from the design of the farebox to the size and placement of a driver's cupholder to the exact colour of white paint.
"When you overcustomize, you [make things more complex], you get delays in procuring your bus and then it becomes expensive," Kritsidimas explained to CBC. "Forty shades of white. All of this adds to the complexity of a bus and how we produce it … How do we make this simpler?"
Bus companies have already standardized batteries and charging components, but they say an outside force is holding up further progress.
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"A lot of it is legacy from years of negotiation with the unions," said Petrunic. "The problem is it has radically driven up the cost of our buses and our bus operations because of these unique designs."
Petrunic said union leaders need to be part of the solution.
John Di Nino, national president of the Amalgamated Transit Union (ATU), told CBC he'd like to be at the table.
"There's always leeway for standardization," he said, explaining that ATU is already working with Centennial College on an ideal bus.
But he said it's important to consider the "end user" in any design.
"Most of our operators can be on these vehicles anywhere from eight to 10 and 12 hours a day," he said. "You want to ensure that they have maximum comfort, which is going to improve safety on the road. It's going to make their working conditions a lot more conducive to delivering safe, reliable and affordable transit."
Customizations and contractual issues have become such a major concern that manufacturers went to Joe Biden's White House to garner support for their case.
Both New Flyer and Nova Bus told CBC progress is being made.
Proterra bankruptcy puts issues in focus
What's at stake for manufacturers should be clear for anyone familiar with the industry, since Proterra — once the third major player in the Canadian market — succumbed to pandemic pressures.
"Proterra went bankrupt. That was the big red flag," said Petrunic.
Neither New Flyer nor the Volvo-owner Nova Bus are at risk of bankruptcy, she said, but companies themselves admit the industry remains fragile.
The Proterra example also shows how losing a manufacturer can affect customers.
The City of Edmonton was an early adopter, bringing in dozens of Proterra e-buses. The company's collapse left Edmonton out tens of millions of dollars and without support for the unexpected issues arising from the new technology.
- Edmonton's fleet of electric buses failing amid manufacturer's bankruptcy proceedings
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On the other side of the country, Ottawa's OC Transpo is using this example as a learning opportunity.
"We took the approach that we're doing a 50/50 split between New Flyer and Nova [in our purchase of e-buses] and that's to de-risk to a certain degree," said Daniel Villeneuve, manager of the capital zero-emission bus program.
He said the city is also providing progress payments to manufacturers, knowing that OC Transpo will need to maintain a good relationship with companies throughout the vehicles' 15-year lifespan.
Back to diesel
When cities signed these contracts, they used delivery dates to plan out the maintenance of their fleets.
That's creating real-world consequences for riders at bus stops.
OC Transpo is now relying on a bus fleet where 55 per cent of the vehicles should already be retired, resulting in added maintenance and less reliability.
Ottawa, like Winnipeg, Saint John and others, is now looking to buy more diesel buses and finding even those are hard to come by.
- Saint John Transit returns to diesel to tackle problem of aging buses, for now
- Winnipeg changing direction on plan for zero-emission bus fleet
- Charlottetown pausing plans on electric buses and depot
Staff told councillors last Thursday that no used buses are on the Canadian market and new diesel buses will take up to two years to arrive.
"Line up," was Petrunic's message to the many cities contemplating a similar move. "Because you're going to be far down the line."
She mentioned one final issue that gums up the works even more.
Cities across North America have been relying on unprecedented government subsidies that could disappear with a change in government.
"We will not have enough transit buses in the country, which we already don't have. We will have reduced services. Transit riders will be upset. People won't be able to get to work," she warned.
"And manufacturers may be facing a bankruptcy or serious cash crunch situation where their viability is at stake."
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