SEPTA may lose the $24 million it spent on electric battery buses

SEPTA may lose the $24 million it spent on structurally flawed Proterra electric battery buses now that the troubled manufacturer has filed for bankruptcy.

The 25 buses were pulled from Philadelphia’s streets in January 2020 after six months when SEPTA found cracks in their frames and other problems. One of the electric battery buses burst into flames late last year in a South Philly depot.

The transit agency and Proterra had been negotiating over repairs that would get the EV buses back in service. Those talks have not produced a solution, and they were canceled abruptly after the Aug. 7 bankruptcy filing, SEPTA officials said.

“At this point we don’t know what the path forward would be and what SEPTA’s [legal] remedies are, and we can’t say when the buses would come back into service,” said Andrew Busch, an agency spokesperson.

The company says it intends to continue operating, seeking more capital or a buyer while holding creditors at bay. Under Chapter 11 of the U.S. bankruptcy code, businesses can file for protection from creditors while they reorganize.

Some transit agencies say Proterra has told them buses they ordered will be delivered. SEPTA was an earlier purchaser of the company’s buses, and they were in use on several routes.

Busch said there had been “progress” in talks over getting Proterra to fix the sidelined buses.

The California-based company has been a leader in the drive toward converting transit buses into EVs to meet climate goals, frequently praised by the White House. It makes transit buses, as well as heavy-duty electric drivetrains, batteries and charging technology.

Proterra did not respond to a request for comment.

In filing for bankruptcy, Proterra cited “market and macroeconomic head winds” as inflation and higher interest rates increased manufacturing costs, which it couldn’t pass on to its transit-agency customers, with contracts signed a year or more before buses are built.

Transit vehicle orders are awarded to the lowest responsible bidder, which can tighten margins, and also are specific to each agency.

“These transit agencies demand highly customized buses that align with the other buses in their respective fleets,” Proterra wrote in the filing. “Therefore, the manufacturing process requires much customization, which makes scaling the business difficult and requires an extensive amount of working capital.”

Officially, SEPTA still hopes for a negotiated solution so it can use its Proterra buses.

Meanwhile, the agency ordered 222 hybrid diesel buses for $178 million from Canadian manufacturer New Flyer to replace the last of its diesel models as it reevaluates all-electric technology.

It also ordered 10 hydrogen-fuel-cell zero emissions buses earlier this year, for $17 million, as part of a pilot program.