FirstGroup partners with Hitachi to buy 1,000 electric bus batteries

17th Nov 2023 07:19

(Sharecast News) - Aberdeen-based transport company FirstGroup has signed a deal with Hitachi that will see it buy up to 1,000 electric bus batteries as it works towards is decarbonisation targets.

The partnership will see the creation of a new 50:50 joint venture, NextGen Asset Co, to buy the batteries valued at £100m, leased over an eight-year period. Both parties have invested £10m into the joint venture, with any remaining investment to be funded by debt.

In exchange, Hitachi will provide battery and charging management services for 1,000 buses powered by the new batteries, as well as a further commitment of 500 vehicles beyond 2026.

FirstGroup said that replacing 1,500 diesel buses with electric models could save 84,000 tonnes of carbon dioxide equivalent every year.

FirstGroup said the deal would contribute £3m per annum to adjusted earnings by the fiscal year ending March 2026 before any potential operational benefits. It will also deliver a £20m saving this financial year and future savings of £40m up to 2027.

FirstGroup said it would also obtain a small minority interest to participate in future value creation through the deployment of Hitachi ZeroCarbon's decarbonisation solutions to commercial fleet operators worldwide.

"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," said FirstGroup's chief executive Graham Sutherland.

"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."