Written evidence submitted by Alexander Dennis Limited (ADL) (EVP0137) Introduction 1.1 Accelerating the transition towards zero emission vehicles is one of the most effective means of decarbonising transport and tackling the threats posed by climate change, therefore Alexander Dennis Limited (ADL) welcomes this opportunity to feed into the Transport Committee’s inquiry on this vital subject. 1.2 ADL is a global leader in the design and manufacture of double deck buses and is also the UK’s largest bus and manufacturer with a market share consistently above 50%. ADL offers single and double deck vehicles under the brands of Alexander Dennis and and has over 31,000 vehicles in service in the UK, Europe, , Singapore, New Zealand, Mexico, Canada and the United States. 1.3 Before the impact of the COVID-19 pandemic, ADL employed 2,700 people worldwide including 2,300 in the UK. ADL is part of NFI Group Inc., one of the world’s largest independent global bus manufacturers with over 100,000 vehicles in service globally and facilities in 10 countries. ADL and zero emission buses 2.1 ADL produces a variety of zero-emission and zero-emission capable buses, including hybrid, battery electric and hydrogen models, that are in service across the UK. Zero emission models represent a growing proportion of our sales, with a 10 fold increase in UK market share in the last 2 years alone. We expect this trajectory to continue and are significantly investing in our zero emission range, offering the market’s widest range of zero emission buses. 2.2 We also believe that it is vital to ensure that as much of this technological innovation and advanced manufacturing takes place in the UK as possible. With our Headquarters in Falkirk and Engineering hub in Ballymena, assembly site in Scarborough, and sales and after-sales offices in Skelmersdale, Anston, Harlow and Guildford, we are a truly UK based business. 2.3 We announced in January 2021 that the design and assembly of the chassis for our electric single and double deck buses, produced in partnership with BYD UK, will start to transition to our UK sites in 2021 – a step taken to strengthen our partnership’s market- leading position while underpinning jobs in Britain and developing skills in the growing market for clean vehicle technology. As the body assembly already takes place in the UK, this means our electric buses are now fully British-built. This is a hugely important development for UK bus manufacturing and skills development – more than 70% of the electric buses introduced in Britain since the launch of this partnership in 2015 have been supplied as a result of the BYD ADL partnership. 2.4 ADL is well placed to deliver on the decarbonisation of the UK’s bus fleet – however, the whole UK bus manufacturing industry is currently facing immediate and serious challenges as a result of the pandemic that mean that without urgent action to support the domestic bedrock of our business, UK bus manufacturers won’t be able to invest in vehicles for export markets. Challenges in decarbonisation – industry threats 3.1 The threat facing the industry can barely be overstated. The coronavirus pandemic has led to well documented impacts on public transport use. What has been less well recognised in some quarters is the accompanying impact on the bus and coach manufacturing sector, and wider supply chain. 3.2 Bus manufacturing is traditionally a low-margin industry which relies on a steady flow of orders to maintain industrial capacity and jobs. Normal volumes see an average of 2,500 buses commissioned per year from UK customers – the coronavirus induced collapse in passenger demand has seen this fall to almost zero. 3.3 At the height of the pandemic, bus usage fell almost 90%; even as demand returns, social distancing requirements mean operators cannot accommodate enough passengers to generate sufficient turnover to invest in their fleets. UK and devolved Governments’ funding to operators for the continuation of bus services does not make provision for investment. With Operators unable to renew their fleets, the flow of orders that the manufacturing sector relies upon has all but stopped. 3.4 This cessation of orders risks having a scarring effect on the industry. ADL is not alone in having had to undertake redundancies and restructuring as a result of pandemic induced demand drops, with the potential for further hard decisions remaining. This capacity will return much more slowly than it is lost – with UK firms unable to fulfil orders if left too late. This will result in UK zero emission bus orders being fulfilled from overseas. 3.5 As a result, UK firms will be less able to invest in researching and developing the next generation of vehicle technology. The UK’s status as a world leader in clean, green technology will be lost in a fraction of the time it took to build it up, for want of a fraction of the cost. Challenges in decarbonising buses - solutions 4.1 The Prime Minister’s commitment to ordering 4000 green buses within this Parliament was well received by the sector – as the pandemic struck, it began to take on a new importance as a key mechanism for helping the manufacturing sector to navigate the crisis. 4.2 However, progress towards honouring this pledge has been glacial. Whilst the 2020 Spending Review saw the allocation of £120 million towards ordering 500 zero emission buses in 2021/22, there have yet to be any further developments and no mechanism is in place to allocate the funding and allow operators to place orders. We are rapidly reaching the point at which orders will arrive too late for any vehicles to be delivered in 2021. The separate £50 million funding to deliver the first All- City, which will order a further 300 vehicles, is now not expected to result in vehicle deliveries before 2023. 4.3 Specific and unavoidable lead times are a necessity of our industry – once an order is placed it could be 6 to 9 months, dependent on powertrain, before manufacturing work is able to begin. This also has an impact on decisions about manufacturing capacity and staffing requirements. For this funding to be the self-help package the industry needs to survive, these orders must come as soon as is feasible. 4.4 The only real demand for the UK market thus far has come from the Scottish Government’s Scottish Ultra Low-Emission Bus Scheme (SULEBS 1 and 2) and activity in London. This intervention from the Scottish Government was crucial for us to be able to keep some of our lines active and to mitigate further headcount reductions. Furthermore, it provided proof that the bus manufacturing industry doesn’t need state handouts, but a bridge to the latent demand for our vehicles that we know exists, even whilst the pandemic continues to suppress ridership. Although the Scottish scheme is small, it can be scaled and the industry as a whole is reliant on the UK Government living up to its promises if we are to survive intact. 4.5 Delivering on existing commitments will help the immediate emergency we face, but clarity is also needed on the remainder of the 4000 buses promised by the Prime Minister. As mentioned, our industry is reliant on a steady stream of orders, therefore decisions must be taken now on how and when orders will come for the remaining 3200 buses. 4.6 A funding mechanism is needed that reflects the realities of the pandemic and the inability of operators to make forward looking investments. We are in regular contact with the both directly and through the Confederation of Passenger Transport (CPT), who have suggested a leasing model through which the needs of manufacturers and operators can be mutually realised. Hydrogen as an alternative fuel 5.1 There is huge potential in the use of hydrogen as an alternative fuel and we see a clear place for it within a holistic approach to delivering a fully green bus fleet when green hydrogen becomes readily available. 5.2 As such, hydrogen fuelled vehicles must not be seen as a silver bullet or short-term fix for the immediate challenges we face in decarbonising bus services. Realising their potential will take time and infrastructure investment particularly around obtaining and storing green hydrogen as well as refuelling restrictions. 5.3 We have spent the last six years refining our battery electric bus product with our partners BYD. Whilst total numbers remain small outside London, ADL battery electric buses are currently active in Glasgow, , Birmingham, Manchester, Nottinghamshire, Coventry, Cambridge, Guildford and Salisbury. The investment in infrastructure in these places has already taken place to support a far greater number of vehicles, with over 1000 due to be on UK roads by the end of 2021. We have finally reached the point where the technology is no longer cost prohibitive – whilst attracting higher up-front costs, they are cheaper to run than internal combustion equivalents. The same cannot yet be said of hydrogen fuelled vehicles, for which millions of pounds in infrastructure costs would be needed before any advantages could be realised. 5.4 ADL is working to produce a hydrogen fuel cell version of our market leading Enviro400 double decker, following extensive nationwide trials of a prototype. We are also able to benefit from the wider learnings within the NFI Group, as one of the leading pioneers in hydrogen fuel cell technology with over 25 years of experience. 5.5 Whilst this experience has made clear to us that hydrogen will form a part of our future fuel mix, it also highlights that a number of obstacles remain before its use can become widespread. Whilst the obvious challenge stems from the availability of the necessary infrastructure, such as refuelling stations and distribution networks, it will also be crucial to put in place a mainstream supply of green hydrogen to ensure it delivers environmental benefits. 5.6 Exciting plans are underway across the UK, many of which are supported by the Government, to get green hydrogen production and carbon capture and storage (CCUS) technology up and running. However, these are the precursor to any more widespread uptake of hydrogen as a fuel source, especially if we are to view it as a truly zero emission fuel source.

February 2021