It’s been a tough few years for China’s privately operated bus networks. In light of some systems struggling with mounting debts and falling traffic, multiple municipal public transport enterprises announced route suspensions last year; several no longer even have the funds on hand to pay employees.

These problems threaten to overshadow the very real successes of the past decade, most notably, the successful shift to new energy vehicles. Nine out of every 10 new energy buses in the world run on China’s streets, with new energy models accounting for more than 80% of all buses in the country.

Chinese bus companies’ pivot to new energy started as early as the 2000s, but picked up speed in 2008 when China vowed to hold a “Green Olympics” in Beijing. The rollout of new energy buses and private vehicles gained further momentum after 2015, when technological breakthroughs improved battery efficiency and reduced costs.

Unfortunately, bus companies have not benefited financially from this success story. Bus company managers often viewed themselves solely as buyers, rather than as significant players in an emerging industry. This misstep cost them the opportunity to translate their market influence into profits. By forming strategic partnerships and investing in battery suppliers such as Fujian province-based CATL, instead of merely purchasing their products, bus companies could have secured a sustainable income from a burgeoning industry that now powers tens of millions of electric vehicles. Instead, with public funds drying up, bus companies are struggling to fund their operations.

That doesn’t mean Chinese bus companies are at a dead end. Contrary to the conventional wisdom, which calls for cutting routes and tightening belts, a more promising and sustainable solution may lie in investing in emerging technologies that, like lithium-ion battery companies a decade ago, show promise but are in desperate need of funds.

One such technology is battery recycling. Lithium-ion batteries used in NEVs are estimated to have a lifespan of around 10 years. While most private NEVs on China’s roads are still quite new, bus companies that transitioned to electric vehicles early are now approaching the end of their batteries’ life cycles. This means bus companies have a strong case for taking a more proactive approach toward battery recycling, becoming both clients and venture capital investors in the process. While direct revenue from recycling bus batteries may be limited, millions of NEVs will soon enter their second decade, meaning that bus companies with a stake in battery recycling could benefit from a market as significant as today’s battery manufacturing market.

Another opportunity lies in the development of vehicle-to-grid (V2G) systems. NEVs are not just endpoints for consuming electricity; they are in fact mobile power banks. V2G systems enable NEVs to feed electricity back into the grid during periods of low usage and high demand elsewhere, allowing for cross-cycle power distribution and balancing the peaks and troughs of energy consumption. Electric buses are particularly well-suited to spearhead this technology because their routes and timetables are fixed, with predictable off-peak periods during the day that coincide with cities’ peak electricity usage. Moreover, the centralized decision-making of bus companies makes it easier for them to negotiate mutually beneficial pricing arrangements with grid companies.

Firms can also explore alternative energy sources such as hydrogen. To be clear, this isn’t a suggestion to mass transition from electric to hydrogen-powered buses, which remain costly. However, small-scale applications on longer routes and in northern China, where low winter temperatures have emerged as a major obstacle for NEVs, could pave the way for the development of the hydrogen vehicle industry.

The central challenge for China’s bus operators is not just to survive the present but to seize the future. Instead of retreating into conventional thinking, they must become key players in an evolving ecosystem that integrates public transportation, energy grids, and emerging technologies. There are already some attempts to move in this direction. For example, the southern Guangdong province is piloting a program using retired bus batteries as energy storage units to balance power loads. The Wuxi Public Transportation Group in eastern China recently conducted reverse full-power discharge performance tests on buses to provide an experimental basis for a V2G pilot. And in 2022, in order to overcome the impact of low temperatures during the Winter Olympics, the northern cities of Beijing and Zhangjiakou invested in hundreds of hydrogen buses.

Still, these are only tentative steps and are often focused more on technology than on growing a business. Given companies’ mounting financial pressures, the window to act is narrowing. Bus operators need to make a commitment to the future before it’s too late.

(Header image: VCG)