Here’s why EPA’s $400M in electric school bus grants matter and how they’ll be allocated
The US Environmental Protection Agency (EPA) just announced the availability of $400 million for clean school buses – the first round of funding available as grants. This is how the money is going to be distributed.
Why the electric school bus grant program matters
The Clean School Bus program, a part of President Joe Biden’s Bipartisan Infrastructure Law, was launched in May 2022. The Bipartisan Infrastructure Law of 2021 authorized the EPA to offer rebates in 2022 to replace diesel school buses with what the EPA calls “clean and zero-emission (ZE) models.” Electric buses are being prioritized over alternative fuels in the 2023 grant program as well.
As the Environmental Defense Fund noted in an email to us today, across over 2,000 applications in the 2022 Rebate Program, more than 90% of buses requested in the first round were for zero-emission electric buses, with under 9% for propane buses and 1% for compressed natural gas buses.
That’s because electric school buses are more fuel-efficient and cheaper on a lifetime basis, and, above all, they’re the safest option for children because they don’t release direct tailpipe pollution.
In a statement emailed to Electrek this afternoon, Kevin Matthews, head of electrification at First Student, the largest operator of electric school buses in North America, said:
Replacing just one diesel school bus with an electric school bus can reduce greenhouse gas emissions by 54,000 pounds each year, improving health outcomes for children and communities.
How the money will be allocated
Electrek asked Matt Stanberry, vice president at Highland Electric Fleets, to explain what the difference is between the first and second round process in the Clean School Bus Program. Here’s what he had to say:
The second round [the 2023 Grant Program] is completely different from Round 1 [the 2022 Rebate Program]. Whereas Round 1 was a rebate awarded by random lottery, Round 2 will be a grant awarded by competitive application. Round 1 had minimal application requirements (the EPA received almost 2,000 applications and delivered around 400 awards worth nearly $1 billion); Round 2 has very detailed application requirements, and the EPA anticipates 25-50 awardees will be awarded a total of around $400 million.
While the EPA wants to continue to serve historically under-resourced communities in Round 2, the EPA is also looking to deploy fleets at scale this round. Round 1 applications were also capped at 25 buses and had no minimums, while this time there are minimums of 15 or 25 and maximums of 50 or 100, depending on whether a district or third party is the lead applicant.
Competitive applications in this round will be awarded points on how well they can demonstrate: cost-share (i.e., show that a district is able to contribute dollars to the project through a private sector partner or another funding source); relevant experience and expertise (e.g., that a district has undertaken electrification projects); high probability of a successful deployment (i.e., that a district can show how it will measure real metrics and why its project has a good chance of succeeding); and air quality and sustainability benefits. All of these factors are new in comparison to Round 1.
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EV sales kept up their momentum in December 2024, with incentives playing a big role, according to the latest Cox Automotive’s Kelley Blue Book report.
December’s strong EV sales saw an average transaction price (ATP) of $55,544, which helped push the industry-wide ATP higher, according to Kelley Blue Book. The December ATP for an EV was higher year-over-year by 0.8%, slightly below the industry average, and higher month-over-month by 1.1%. Tesla ATPs were higher year-over-year by 10.5%.
Incentives for EVs remained elevated in December, although they were slightly lower month-over-month at 14.3% of ATP, down from 14.7% in November.
EV incentives were higher by an impressive 41% year-over-year and have been above 12% of ATP for six consecutive months. Strong sales incentives, which averaged more than $6,700 per sale in 2024, were one reason EV sales surpassed 1.3 million units last year, according to Cox Automotive, a new record for volume and share.
(My colleague Jameson Dow reported yesterday, “In 2024, the world sold 3.5 million more EVs than it did in the previous year … This increase is larger than the 3.2 million increase in EV sales from the previous year – meaning that EV sales aren’t just up, but that the rate of growth is itself increasing.”)
Kelley Blue Book estimated that in December, approximately 84,000 vehicles – or 5.6% of total sales – transacted at prices higher than $80,000 – the highest volume ever. KBB lumps gas cars and EVs together into this luxury vehicle category, so this is where Tesla Cybertruck is slotted.
However, Tesla bundles sales figures of Cybertruck with Model S, Model X, and Tesla Semi(!) into a category it calls “other models,” so we don’t know for sure exactly how many Cybertrucks Tesla sold in Q4, much less in December. However, Electrek‘s Fred Lambert estimates between 9,000 and 12,000 Cybertrucks were sold in Q4, and that’s not a stellar sales figure.
What will January bring when it comes to EV ATPs? What about tax credits? Check back in a month and I’ll fill you in.
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Tesla is now claiming that Cybertruck was the ‘best-selling electric pickup in US’ last year despite not even reporting the number of deliveries.
There’s a lot of context needed here.
As we often highlighted, Tesla is sadly one of, if not the most, opaque automakers regarding sales reports.
Tesla doesn’t break down sales per model or even region.
For comparison, here’s Ford’s Q4 2024 sales report compared to Tesla’s:
You could argue that Tesla has fewer models than Ford, and that’s true, but Tesla’s report literally has two lines despite having six different models.
There’s no reason not to offer a complete breakdown like all other automakers other than trying to make it hard to verify the health of each vehicle program.
This has been the case with the Cybertruck. Tesla is bundling its Cybertruck deliveries with Model S, Model X, and Tesla Semi deliveries.
Despite this lack of disclosure, Tesla has been able to claim that the Cybertruck has become “the best-selling electric pickup truck” in the US in 2024:
It very well might be true. Ford disclosed 33,510 F-150 Lightning truck deliveries in the US in 2024 while most estimates are putting Cybertruck deliveries at around 40,000 units.
Those are global deliveries, but Tesla only delivered the Cybertruck in the US, Canada, and Mexico in 2024, and most of the deliveries are believed to be in the US.
However, there’s essential context needed here, as we highlighted in our recent ‘Tesla Cybertruck sales are disastrous‘ article.
First off, Tesla had a backlog of over 1 million reservations for the Cybertruck that it has been building since 2019. This led many to believe Tesla already had years of demand baked in for the truck and that production would be the constraint.
However, based on estimates, again, because Tesla refuses to disclose the data, Cybertruck deliveries were either flat or down in Q4 versus Q3 despite Tesla introducing cheaper versions of the vehicle and ramping up production.
Again, that’s after just about 40,000 deliveries.
Furthermore, with almost 11,000 deliveries in Q4 in the US, Ford more likely than not outsold Cybertruck with the F-150 Lightning in Q4.
Electrek’s Take
Tesla is in damage control here. There’s no doubt that it is having issues selling the Cybertruck.
Inventory is full of Cybertrucks and Tesla is now discounting them and offering free lifetime Supercharging.
Tesla is great at ramping up production, and it’s clear the Cybertruck is not production-constrained anymore. It is demand-constrained despite having over 1 million reservations.
Again, those reservations were made before Tesla unveiled the production version, which happened to have less range and cost significantly more.
The upcoming cheaper single motor version should help with demand, but I have serious doubts Tesla can ramp this program up to more than 100,000 units in the US.
As a reminder, Tesla installed a production capacity of 250,000 units annually and Musk said he could see Tesla selling 500,000 Cybertrucks per year.
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