Electric Bus Maker Blue Bird Is Schooling the EV Skeptics as Stock Soars

This has been a difficult year for many electric vehicle companies. Despite overall growth in EV sales from 2023, EV makers Tesla and Rivian announced layoffs this year as their stock prices slid.

But one EV maker stands out: Georgia-based Blue Bird has seen its stock price soar more than 100 percent since January as the company electrifies more of the familiar yellow buses it sends to school districts around the country.

Founded in 1927, Blue Bird is approaching a century of operation, and it appears on Newsweek's rankings of the Most Trustworthy Companies in America and the World's Most Trustworthy Companies. While the basic appearance of its main product hasn't changed that much over the years, the company's recent success comes amid some major changes.

In addition to expanding its EV capacity, the company recently announced safety additions to its buses such as three-point safety belts for passengers and air bags for drivers—both industry firsts. Last year, Blue Bird workers voted to join a union and about 1,500 of its approximately 2,000 workers are now represented by the United Steelworkers of America. In May, the union and company finalized a contract substantially raising worker pay and adding benefits.

Conventional business wisdom might say that adding safety features and paying higher wages would increase an automaker's costs, making it less competitive as it ventures into the uncertain EV market. But Blue Bird has schooled the skeptics to become the country's top-performing EV maker.

"Blue Bird shows that as an EV company, you can still make money, and Blue Bird is doing that with every bus that we sell," Blue Bird President Britton Smith told Newsweek in a wide-ranging interview.

Smith said Blue Bird is leaning into clean vehicles with a new facility that can produce 5,000 EVs a year and a new EV chassis line aimed at the delivery vehicle market. Sometime this summer, the company expects to deliver its 2,000th electric bus.

As it makes the electric transition, the company is in the national spotlight due to support from Biden administration policies to encourage cleaner vehicles.

The Clean School Bus Program created by the Bipartisan Infrastructure Law provides $5 billion to help school districts switch from diesel engines that pollute neighborhood air and put greenhouse gases into the atmosphere. Blue Bird said the company benefitted from about $200 million in additional revenue in 2022 as a result of that policy support.

But Smith said Blue Bird's history with clean vehicles predates the current push for EVs and goes back decades.

Newsweek: Tell me a little more about the origins of EV manufacturing at Blue Bird. What was the original thinking that got the company started—pardon the pun—down this road?

Smith: Blue Bird started on the EV transition in 1994—we built a few demonstration vehicles for the Atlanta Olympic Games. So, Blue Bird is a little company based down in Georgia and as the more nimble, smaller school bus company, we really saw that we needed to differentiate ourselves in technology. We saw EVs as a growing trend back in the '90s, and then in 2018, we launched our first commercially sold vehicle, so we've been at it for some time. It's an opportunity for us to differentiate ourselves and have a product that customers are looking for, and as funding comes out, and as more opportunities for school districts to buy the EVs come out, then we're very happy to be able to lead the way.

How much of your fleet is electric now compared to all the output from Blue Bird?

Overall, in the school bus industry, there are about 500,000 school buses on the road, and less than 2 percent are electric, over 93 percent are diesel. So, there's a really large opportunity to electrify that fleet. Within Blue Bird…about 9 percent of our volume every year is electric. So, it's making up a large portion. And we also have other clean transportation like propane, and really are moving away from the traditional power trains like diesel.

What kind of feedback are you getting from the school districts that are using the electric vehicles?

First, the Blue Birds are highly reliable, they're on the road virtually every day and actually performing better than some of the more traditional internal engine buses. Second, the thing that the drivers really enjoy is the amount of torque that's available. It can carry a pretty heavy weight, a full school bus with the kids, and it can accelerate quite well. The other piece that drivers really like is that the school buses are quiet. This is important obviously for noise pollution but also it enables the school bus driver to hear everything that's going on inside and outside of the school bus, so it's an added benefit to have a safe, nice, quiet ride.

The third piece is that the application of electrification is really perfect for school buses. A school bus has a short route in the morning and afternoon, between 30 to 40 miles, and then they return back to the same location in the evening. So, it's a perfect opportunity for them to charge overnight and be ready to transport the kids the next day.

As most of us grew up riding diesel buses, if you're sitting in the back of the bus, you can smell the fumes. And if you're waiting for the school bus in the morning, you're breathing in those fumes. An electric bus takes those emissions out of the inner cities and the high population density areas where school buses operate. And the kids really like it. They feel like they're riding into the future.

The Biden administration has obviously placed a lot of emphasis on promoting and supporting electric vehicles. I'm wondering what role has policy played in your business decisions around EVs?

Obviously, Blue Bird wants to lead the way in these areas, and any policy decision helps to support that transition. With the Biden administration and the Inflation Reduction Act, it provides $5 billion of funding for clean school buses, that includes both electric and propane, and those technologies have really taken off with the support of the administration and the additional funding that's coming out.

We've seen really an exponential growth in applications and number of school districts across the country. Blue Bird already has EVs deployed to 41 states and four Canadian provinces. But this additional funding has really helped increase the interest across the country.

And what's the rough price differential for school districts that want to go electric versus diesel?

EVs are significantly more expensive. A diesel school bus might cost somewhere around $150,000 for a school district, compared to say $350,000 for an electric school bus. So, it's a lot more expensive. Now, obviously, the funding is a great opportunity to offset that cost up front. But school districts also save a significant amount of money in operating an electric school bus compared to a diesel. Where the diesel might cost 79 cents a mile to operate, an electric school bus could cost about 19 cents a mile to operate. So, over the life of the bus, they're saving a lot of money.

It has been a big year of changes for your company. A little more than a year ago, your workforce voted to join the union, the steelworkers union. What brought that about, and how has that changed things at your workplace?

The momentum around unions in the South has been significant, and our team members all voted to bring the union on. In May of this year, we finalized the contract and I'd say that it was a good negotiation and really everyone is very excited with where it came out. We were able to provide a significant wage increase for all of our employees, profit-sharing, as well as 401(k) contribution to our employees, so it really helps Blue Bird to be more competitive in the workforce environment in middle Georgia, and it helps our employees be more aligned with the company's success. They're seeing the rewards just as the rest of the company is.

It kind of goes against a lot of conventional wisdom about labor costs, that if the workforce is union, your sales are going to suffer, stock price will suffer, etc. It doesn't seem to be playing out that way. If we think about the EV transition and what's happening with labor in automaking, what are the lessons here?

Well, I would say we're breaking a lot of the norms. A lot of these conventional wisdoms, that you can't be a profitable EV company, obviously, that's not true. We're doing quite well. Having a positive relationship with the union is good for employees, and it's good for the company overall. And even on safety, we're breaking the convention that seatbelts are too expensive, and we're making them more affordable for school districts nationwide.

So, the message from Blue Bird's transition to electrification is that you can do so profitably.

Correction 6/28/2024, 4:00 p.m. ET: This article has corrected figures regarding Blue Bird's workers voting to join the steelworkers union, the number of U.S. states and Canadian provinces where the company has sold buses, and how much the company has benefited from the Bipartisan Infrastructure Law.