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Winnipeg’s NFI sees major growth in zero-emission bus orders

Published by Sustainable Biz Canada

NFI (New Flyer) Group is experiencing rapid growth in demand for its zero-emission bus products as worldwide momentum builds to reduce greenhouse gas emissions in the transportation sector.

CEO Paul Soubry said the Winnipeg-based global bus and motorcoach manufacturer is one of the leaders in the sector and is committed to the transition in the coming years.

“In 2020, about 10 per cent of our revenue was zero emission. This year we think it will be about 20 per cent. It’s inevitable in our lifetime, let’s call it the next 20 years, we’re going to go from about 10 and 20 per cent of our revenue to 100 per cent,” he told SustainableBiz.ca in an interview.

“Battery prices have come down dramatically. The vehicles that we design have so much complexity and rigidity in the structure and the design and the centre of gravity, that we are able to build exactly on the same production line either a diesel, a natural gas or an electric bus. So we don’t need separate factories for this stuff. We’ve already made the investments to be able to build electric vehicles on our production line.”

While the up-front cost to acquire a bus powered by electricity is higher, he said both operating and maintenance costs are lower than for diesel vehicles. Ultimately, this means the net operating costs are either the same, or less, for the more sustainable buses.

As the industry transforms from fossil fuels, however, there is one issue in many areas: “The challenge is not the bus itself as much as it is the infrastructure (in cities).”

The move to net zero is an evolution, not a revolution

Soubry called it an evolution rather than a revolution. The change is backed by government funding to move in this direction, and there is political pressure to keep up the momentum.

“It’s not a matter of if. We are going to go to zero emission. It’s just a matter of when and how fast.”

New Flyer, NFI’s core legacy company, was founded in 1930 in Winnipeg. In the 1990s, the business was bought by a Dutch company, which had technology being deployed in Europe. The design trend moved from high-floor buses, such as a school bus where passengers go up the stairs to the seating area, to a low floor.

“New Flyer took the industry in North America by storm and so within the span of seven or eight years, the entire North American market converted to low floor. Ever since then the company has been kind of the first; the first with natural gas, the first with hybrid, the first with electric trolley, the first with fuel cells, and so on and so forth,” said Soubry.

The business continued to grow and went through different owners but it came to a point where the size and shape of the market were relatively stagnant. As it was thinking about going forward with electrification or other dynamics like the size of the vehicle, it had a choice to go after and it decided to scale the business.

New Flyer acquired Motor Coach Industries, the largest motor coach manufacturer in North America. Ironically, Motor Coach was also founded in Winnipeg in 1932. The company then added a small bus manufacturer in Indiana called ARBOC, followed by the acquisition of the world’s largest double-deck producer and the U.K.’s largest bus maker Alexander Dennis.

The company went public in 2005 on the Toronto Stock Exchange. There is no single controlling shareholder.

New Flyer evolves with zero-emission vehicles

Soubry said New Flyer is one of the largest independent bus and coach manufacturers in the world. It has 105,000 vehicles on the road and employs about 8,000 people in 10 countries, including 3,000 in Canada.

The company was bringing in about $3.68 billion in revenue per year prior to COVID-19, selling about 7,500 vehicles a year. It sells transit buses, motor coaches, commuter shuttles and double-deck buses.

The company has three types of zero-emission vehicles — an electric trolley; a 100 per cent battery electric; and a fuel cell electric bus. The latter is effectively a battery-electric bus with a fuel cell component to generate energy while en route, which makes it effectively a range extender.

Soubry said about 50 per cent of current sales are pure battery-electric, about 25 per cent is fuel cell electric, and about 25 per cent is trolley.

Overall, in 2020, he said 67 per cent of revenue is transit buses, 15 per cent is motor coach, three per cent is low-floor, shuttle-type buses and 16 per cent parts and aftermarket service.

“The reason we wanted to diversify was to get scale as we move to zero emission,” he explained. “Battery sourcing, battery packaging, the strategies around energy optimization, battery management systems, remote telematics, to be effective we needed scale and that’s why we wanted to try and diversify our business.”

That diversification includes not only the types of buses, but also accessing public and private sales, and adding new international markets.

Because of the size of the market, however, transit remains the bulk of NFI’s business. Soubry said there are about 83,000 transit buses on the road in North America. By contrast, there are about 40,000 motor coaches.

The road to zero emissions is shorter than we think

“In addition to you and I and our politicians wanting cleaner air, there’s also this massive issue of congestion in cities,” Soubry explained. “Our view, while COVID has fundamentally changed a bunch of stuff like work from home, transit buses aren’t going away. In fact, we may get even more upside.

“Our view is buses aren’t going away. They’ll change in size and shape and energy propulsion, and now if you get on a 2021 bus there’s WiFi, noise attenuation, voice enunciation in terms of stops, the efficiency of all these sensors so we’re right beside the curb. All this stuff actually makes buses pretty attractive around the world to try and move people in a mass way.”

Building zero-emission buses also means cities can sustainably put many buses on the road in the span of two or three or four years, rather than waiting 10 years for major transportation infrastructure projects like light rail.

Soubry said the company’s primary markets are Canada, the U.S., the U.K., Singapore, Hong Kong, New Zealand and it is moving into Europe with buses now in Switzerland and Germany. He said 81 per cent of the company’s revenue is in North America, 14 per cent is in the U.K. and Europe and five per cent is in Asia Pacific.

He said there are a lot of players around the world in the bus market, but NFI believes it can be exceptionally strong in the double-deck market in some of the major European cities.

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