(Bloomberg) -- BYD Co., one of the world’s largest suppliers of electric vehicles, has formed a joint venture with a San Francisco investor that will lease its buses to cities, schools and corporations in the U.S.
The Warren Buffett-backed Chinese manufacturer is partnering with Generate Capital to establish a program that they’re describing as the first of its kind. As part of the venture, Generate is investing $200 million to buy and lease the buses. BYD will supply the vehicles and market them to customers.
The two companies are betting they can help speed the adoption of battery-powered buses by cutting customers’ upfront costs. Despite their cheap fuel and environmental benefits, electric buses have been slow to take off in the U.S. -- largely because they’re expensive to buy. And banks have failed to offer the best financing possible for such vehicles because the lenders don’t navigate the incentives available, said Jigar Shah, co-founder and president of Generate.
“There’s money available, but it’s not efficient,” he said. (Perhaps not coincidentally, Shah pioneered a rooftop solar leasing program as co-founder of SunEdison Inc. that helped usher in the widespread adoption of solar panels.)
So far, only about 350 of the estimated 386,000 electric buses deployed around the globe are operating on American streets. About 99 percent of them are in China, according to Bloomberg NEF. The BYD-Generate venture has already financed 24 buses in California, Colorado and New Mexico. Customers include Facebook Inc. and Stanford University, Shah said.
“The purpose of this is to go national,” he said. The partnership will also help customers navigate state and local incentives.
Buffett’s Berkshire Hathaway Inc. owns almost 25 percent of BYD’s H shares, traded in Hong Kong, according to data compiled by Bloomberg.
Shah co-founded Generate in 2014 to invest in renewable-energy, energy-efficiency, waste, agriculture and water projects.
©2018 Bloomberg L.P.