"""""""""""""""" Cities Climate Finance Leadership Alliance

Shifting from diesel to e-buses isn’t easy as electric buses can cost two to four times more upfront than conventional diesel buses, they need the infrastructure to support consistent charging and their batteries need to be replaced at least once during their lifetime, which can be costly - battery replacement can be nearly half of a vehicle’s price. However, as well as the benefits of zero-emissions, electric buses have significantly lower operating costs. Shenzhen Bus Group SZBG electrified its whole bus fleet from 2009 to 2017: a demonstration stage in 2009-2011, followed by small pilots from 2012-2015, and a large-scale electrification from 2016-2017. The buses were procured from three manufactures: BYD (79.1%), Nanjing Golden Dragon (17.0%) and Wuzhoulong (3.9%). In order to reduce upfront costs of the complete fleet renewal, SZBG introduced a financial leasing model which used a financial leasing company that purchases and owns the vehicles and leases them to the SZBG for a period of eight years. The bus operating company takes ownership of the vehicles after the leasing period is over. The batteries are returned to the manufacturer for recycling and disposal, while the bus body is sent for scrappage and metal recycling. Since the leasing period equals the total life of the buses, this arrangement turned the high-cost procurement into more manageable annual rental/lease payments.


Shenzhen, China


East Asia and Pacific


Operating lease finance

Instrument category

Leasing and asset finance models

Secondary instruments


Project size (range)

USD 100-200M

Project size (details)

USD 255M


The Shenzhen Energy Conservation and New Energy Vehicle Demonstration and Promotion Leading Group (SNEVLG)

Year of financial closure



The Shenzhen Bus Group (SZBG)

Primary financer

National government and Government of Shenzhen, via subsidies

Other co-financers

Bus manufacturers, BYD, Nanjing Golden Dragon and Wuzhoulong , via the leasing arrangements.

Other contributors


Other transaction participants


Barriers addressed

Leasing avoids high upfront costs: Leasing the e-buses from the manufacturers, with the ability to own them after 8 years, greatly saved operators’ upfront investments, and reduced the need for debt financing.

Government subsidies offset high upfront costs: Before 2016, a 12-meter e-bus in Shenzhen received a USD 150,000 government subsidy, more than half of the vehicle’s price. However, as the costs of e-buses decrease, subsidies are often no longer necessary, as e-buses become cost-competitive with diesel buses. According to a study conducted by the World Bank and Global Environment Facility, [2] the lifecycle cost of e-buses in Shenzhen as of 2016 (including procurement, energy and maintenance costs over an eight-year period) is USD 375,457, almost the same as a diesel buses lifetime cost of USD 342,855. In short, while e-buses in Shenzhen have a high upfront cost, their operation and maintenance costs are significantly lower than those of diesel buses.

Risk of batteries failing during the bus lifetime: The early-phase technological immaturity of e-buses, coupled with the mid-life battery replacement need, often lead to frequent mechanical breakdowns and increased costs. Bus operators traditionally shoulder all these costs, but in Shenzhen, bus manufacturers provide a lifetime warranty for vehicles and batteries, because the bus operators required this at the procurement stage.

Charging infrastructure: Shenzhen adopted a type of e-bus where a five-hour charge supports 250 kilometres (155 miles) of driving, almost sustaining a full day of operation. However, to ensure recharging does not disrupt bus services, bus operators collaborated with charging infrastructure providers to furnish most of the bus routes with charging facilities; currently, the ratio of charging outlets to the number of e-buses is 1:3. [2] The charging facilities are also open to private cars, thereby improving the financial performance of the charging infrastructure. The bus operators also coordinated the time of charging with the operation schedule, with all e-buses charged fully overnight when electricity prices are low, and recharged at terminals during off-peak travel times.[2]

Financing structure

Instead of directly procuring e-buses at subsidized prices (around USD 90,000-120,000), the Shenzhen Bus Company used 100% financial leasing to purchase 1,000 new battery-electric buses, leasing the buses over the agreed-upon course period, and then buying them at a designated price. In Shenzhen, the manufacturer provides lifetime warranties for batteries, motors, and electronic control systems to minimize service-related risks for bus operators.

Suitability for cities in low-and-middle income countries (detail)

Somewhat. Leasing arrangements are very suitable for bus operators in LMICs that wish to transition to an electrified fleet. Even without government subsidies, the life cycle costs of diesel and e-buses are approaching parity, with much reduced operating costs for e-buses. Guarantees for battery performance are another important success factor and support in implementing appropriate charging infrastructure.


Berlin, A., Zhang, X., Chen, Y. (2020) Case Study: Electric buses in Shenzhen, China

Lu, L., Xue, L., Zhou, W. (2018) How Did Shenzhen, China Build World’s Largest Electric Bus Fleet?

WRI. (2019) Financing Electric and Hybrid-Electric Buses: 10 Questions City Decision-Makers Should Ask


[1] Lu et al (2018) How Did Shenzhen, China Build World’s Largest Electric Bus Fleet? WRI Blog



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