Pursuing higher compliance for the mandatory electric bus program in Vietnam: Should we keep a traditional business model or promote a fleet leasing model?

Abstract

This paper investigates and compares the economic and environmental benefits of a traditional business model as opposed to a fleet leasing model for electric buses (e-buses). A combination of the emission model and financial model, along with secondary data, was adopted to simulate the environmental and economic impacts of three bus technologies (i.e. diesel buses, compressed natural gas buses, and electric buses). The environmental aspects were evaluated by setting the energy flow of CO₂ emission simulation, considering both direct and indirect emissions. The economic impacts of e-bus versus baseline diesel and CNG alternatives were estimated using the metric total cost of ownership (TCO) per km. We determined that although the mandatory e-bus program might represent a viable option when compared to the combustion alternatives from an environmental standpoint, e-buses are less appealing to bus companies due to their significantly lower cost-competitiveness under a traditional (current) business model. In contrast, a fleet leasing model brings large financial benefits to bus companies, increasing more probability of acceptability and intention of compliance from bus operators. Specifically, our analysis estimates that implementing the e-bus mandatory program with a new leasing model will result in a maximum of 47 %, 90, and 97 % emission removal in 2030, 2040, and 2050 respectively. In the same period, the TCO per km reduces a maximum of 41.8 %, 31.0 %, and 17.4 %, respectively, compared to the traditional business model. The findings can be valuable for cities, practitioners, and bus companies, aiding in a better understanding of the challenges and benefits of the bus leasing model in order to better plan for e-bus uptake in Vietnam.