First partners with Hitachi for bus batteries
Hitachi ZeroCarbon has entered a battery provision partnership with FirstGroup.
The arrangement sees Hitachi provide batteries for First Bus’s expanding electric bus fleet. The partnership will see up to £10m cash investment each from Hitachi and FirstGroup, supporting the acquisition of 1,000 batteries.
In addition, under the agreement, Hitachi ZeroCarbon will provide its world-leading Battery Charging and Management Services (BCMS) for 1,000 buses powered by the new batteries as well as a further commitment of 500 vehicles beyond 2026. This is expected to allow FirstGroup to optimise bus battery efficiency and cost, likely resulting in materially lower future capital deployment by extending the batteries’ useful bus life beyond their initial eight-year OEM warranty periods, at zero lease cost. First Bus is also expecting to see improved energy utilisation through smart charging, effective battery management and dynamic energy management.
The new venture will build on the two companies’ existing strong relationship, which has already seen Hitachi Europe selected as the prime strategic partner for First Bus’s decarbonisation programme at its flagship Caledonia bus depot in Glasgow during the UN’s COP26 summit.
FirstGroup says the partnership should result in an anticipated contribution to the Group’s adjusted earnings of around £3m per annum by FY 2026 before any potential operational benefits. This is in addition to an expected £20m saving in the Group’s FY 2024 capital expenditure, combined with future savings of approximately £40m to FY 2027.
The batteries will be leased from NextGen AssetCo to First Bus over an initial eight-year period, at an underlying debt finance rate in line with the Group’s borrowing rate, with the potential to extend the lease by a further two years at zero-cost depending on battery capacity.
“Looking ahead, we are also excited about the possibilities for future value creation as Hitachi ZeroCarbon delivers market leading decarbonisation solutions to transport operators worldwide, leveraging our joint experience” – Graham Sutherland, FirstGroup Chief Executive Officer
Graham Sutherland, FirstGroup Chief Executive Officer, said: “The pioneering alliance with Hitachi is a major strategic partnership for the Group as we progress towards our ambitious 2035 decarbonisation target for our bus fleet. It will allow us to continue the electrification of our fleet and depots with increased efficiency and greater visibility of our financial commitment, and unlike other possible arrangements, we will retain much of the residual value in the batteries as they are taken off our buses. Looking ahead, we are also excited about the possibilities for future value creation as Hitachi ZeroCarbon delivers market leading decarbonisation solutions to transport operators worldwide, leveraging our joint experience.”
“Hitachi is committed to becoming a climate change innovator” – Alistair Dormer, Executive Vice President and Executive Officer, General Manager of Green Energy & Mobility Strategy Planning Division, Hitachi Ltd
Alistair Dormer, Executive Vice President and Executive Officer, General Manager of Green Energy & Mobility Strategy Planning Division, Hitachi Ltd, said: “Hitachi is committed to becoming a climate change innovator. We continuously strive for growth through collaboration and co-creation with our partners and customers, and this specific partnership enables us to use our innovative technologies and global expertise to help decarbonise fleets efficiently, discover untapped revenue streams, and maximise the residual value of assets. I’m delighted we’ve successfully grown our existing relationship with FirstGroup, which will further add to our decarbonisation experience and combined learnings, in developing solutions for transport operators globally.”