Name: How America Ended Up Paying So Much for Public Buses
Uploaded: 2026-02-15T21:53:05.000Z
Duration: 11 min 26 s
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Adverbs of degree

Buses are an incredibly important part of America's transit system.

Ed Glaeser is an economics professor at Harvard and co author of a paper on public buses for the Hutchins center at the Brookings Institution.

On average, that means an American takes 10 bus rides a year.

But of course, it's not like an average person does 10 rides.

It's more that, you know, there are some people who take hundreds and hundreds of rides and some people who take none.

But as much as people rely on public buses, there is room for improvement.

New York City Mayor Zoran Mamdani certainly thinks so.

We know that for so many New Yorkers, public transit is increasingly becoming out of reach.

That is why at the heart of our campaign was a commitment to make the slowest buses in America fast and to make them free.

And Harvard's Glazer agrees at least that we could do more with less when it comes to our public bus systems.

Lot to love about the bus, and certainly it needs to be cheaper.

How much you could do with more efficient use of the existing bus system in New York versus adding to the number of buses, I'm not sure.

But in general, I think the future of American public transit should have a lot of buses in it.

We're just paying way, way too much for our buses.

So the average electric bus in the US costs about $1.05 million.

That is an astounding, astounding number.

You can buy a perfectly nice 36 foot electric bus from Hyundai for $350,000.

Now, obviously that wouldn't necessarily be compatible with the American Disability act, but

it just gives you an idea of just how expensive it is.

And it's not just compared to other countries that our buses seem overpriced.

Between 1995 and 2025, the quality adjusted cost of a new car dropped by 40%.

Because in the automotive industry, right, technological change happens.

Price of a diesel bus is slightly higher now than it was 30 years ago.

We found one 40 foot electric bus in a larger order costing $450,000.

Another agency that was just buying 10 of them spending $950,000 per bus.

The heads of America's transit systems agree that there is a problem.

Deborah Johnson is the head of Denver's transit system.

When we're Looking at our operative word within our moniker being regional, there's often an expectation for localized services.

RTD happened to be the first public private partnership within the transit space when commuter rail was brought online back in the mid 2000s.

The area that Denver serves is unique, but that very uniqueness may be part of the problem.

Every transit system wants to have its own particular version of the public bus.

The bus agencies will often specify, we want this type of engine, we want this type of seat, we want this type of other things.

So it's sort of like if you were going to buy a car by sending out a request for proposals to GM and Hyundai and Toyota and you said, look, I'm looking for a four wheeled family vehicle and you've got to make sure you buy the engine.

I want this model from Honda and I want these tires from Michelin, and

And you can imagine what you would get in terms of the price of a car like that.

The miracles of low cost come from scale economies, right?

That's what Henry ford told us 120 years ago with vehicles.

And yet that's not what we're getting with buses, precisely because we're finding roughly 70% of new buses in our data are literally unique in our data, meaning that, you know, there's no other bus exactly like it that's being ordered by any other bus agency.

Johnson recognizes that the bespoke nature of public buses doesn't help with the cost.

But at the same time, she says there can be good reasons to provide different buses for different geographies.

Oftentimes, transit agencies want to customize buses.

They want it to be more analogous with their brand of their transit agency, putting an undue hardship on the bus manufacturer when you want to customize windows, for instance, or you want to customize seats so you have your logo branded in to the seat, for instance.

Now, keeping in mind that there will have to be some design options taken into consideration, because if you're operating a transit system in Arizona, you may need a greater cooling system as we look at H Vac.

But when you think about there could be over 400 shades of white that one is using, that's not really conducive in reference to cost.

I would say we have to ensure that we are being procurement smart and not procurement first.

And what I mean by that is determining what it is that one needs for the betterment of their operation.

The industry recognizes the problem of standardization and is taking steps to address it nationwide.

We have come, I think, to a terrific set of recommendations that are being implemented now.

By and large, they deal with the commercial terms, how we pay the bus manufacturers.

We have used an old procurement model in the industry for many years, which was one that a customer places the order and maybe a year and a half or two years later, they get the vehicles delivered, but

they don't pay a dime until that happens.

Paul Scutellis is president and CEO of the American Public Transportation Association.

To what extent so far have you seen municipalities step up to your recommendations on standardization and pooled procurement?

Well, I think it's been embraced by our industry.

We've come to some common understanding of what we can do to help each other, agency and producer, to make sure that we're getting good quality products that meet the needs of the agency so they can serve their customers reliably, but

also provide for a more reasonable price and a more reasonable cost.

Johnson sits on the board of the APTA and has worked on efforts to standardize bus procurement.

And so the purpose of the bus manufacturing task force was coming together, thinking about what we could do to streamline to more or less ensure that there was a price that is consistent in the customization that will enable a bus manufacturer to have on their assembly line a bus that, you know, RTD and Denver could leverage, whereas it could be leveraged to in Long Beach, California.

But it's not just standardization that could help bring down the price of public buses.

It's also competition, something that the American public bus system pretty much lacks right now.

So one thing that's critically important as we look at modernizing our fleet is making decisions relative to leveraging operator dollars and capital dollars as it relates to bus purchases here in the United States over the course of the past several years.

Where There was, say, 10 bus manufacturers doing business in the United States over the past three years, that number has decreased substantially.

There's a relatively small number of companies that are providing most of the buses.

So 50% of buses in the US are currently being produced by only two bus companies.

So it's really not a very competitive industry.

You asked the question a moment ago about other factors contributing perhaps to the higher prices here in the US or we only have two manufacturers of significant size that produce buses for the public transit systems in the US Today.

That needs to be at least another manufacturer, perhaps even a fourth, to provide the capacity and provide the competition that I think would be helpful in terms of helping to contain those prices.

And that's where the federal government comes in.

Far from helping to bring down the cost of buying new buses, the government may be making the problem worse.

US federal money pays for about 80% of the cost of buses bought for by local transit agencies.

And that certainly reduces the incentives to cut costs because the federal government is picking up the price tag at the end of the day.

It also reduces flexibility because for understandable reasons, the Department of Transportation has rules about how to do bus procurement.

So you can't just make it up as you go along.

The most obvious of this is the buy American rules, which make it hard to harness the value of foreign competition, which means you couldn't, if you're going to use Department of Transportation funds, you couldn't just order your $350,000 electric buses from Hyundai, even if they did satisfy the ADA requirements.

But so both by funding it, it both reduces the incentives to cut costs, but

also it covers procurement entities with a whole bunch of extra rules that make it difficult to be innovative, to be smart, to be nimble.

Federal funding and restrictions may be making public buses more expensive, but

Glaeser says that there may also be ways to use the federal government to bring prices down.

So the most obvious is just for the federal government to throw in a maximum price per bus that they're willing to pay that might differ across types of buses.

So diesel might be different from electric, but you put in a maximum.

You can pull the maximum from what companies were, what transit agencies were paying for buses last year.

So you could take, let's say the price of one of these buses that was at the 25th percentile, meaning that 3/4 of the buses bought last year were more expensive, 1/4 were less expensive, and

Now, they can still spend more if they want to spend their own money, but

they're not going to get federal money to support something that's lavish.

Number two, encourage agencies to work together.

So, you know, try to get bundles of buses ordered once to avoid the small bespoke orders, and

at least you're getting larger bespoke orders.

And then there's always the possibility of opening the business up for more competition.

Difficult when it comes from abroad, but maybe not impossible if done right.