While electric cars seem to be generating quite a bit of excitement these days, investors may be surprised to learn that the transition to electric buses is happening even faster. Estimates call for plug-in hybrid and electric (H&E) bus sales to be more than 42,000 by 2020, achieving 15.4% market penetration, much higher than the anticipated 3.5% H&E car penetration. Purely electric buses are projected to comprise 5.7% of the 2020 bus market. 
Through the end of 2013, Chinese electric bus company BYD [BYDDF] sold more than 1,000 electric buses. The company also already has future orders in place for more than 5,000 units, valued at $1.6 billion USD. To put this into perspective, global electric bus sales totaled 5,000 units in 2012.
In contrast, 206,000 plug-in hybrid and electric cars were sold in 2013, up from 113,000 in 2012 accounting for 0.25% of the global market.  According to estimates, 3.8 million plug-in hybrid and electric cars will be sold in 2020, reaching 3.5% of the market. 
Unlike most consumers, bus companies take into account the total cost of ownership over the lifetime of a vehicle, and on that basis many of them have begun to favor electric buses. Warren Buffett certainly has bought into this trend. He owns a 10% stake in $38 billion BYD.
BYD recently won contracts to build electric buses for transit agencies in Los Angeles and Long Beach, California, over U.S. competitors. The buses run on 324 kWh iron-phosphate batteries and already are being sold in South America, Europe and Asia.
The range of BYD’s 18-ton bus is roughly 155 miles, which is remarkable for its size. While a BYD bus weighs as much as nine Tesla [TSLA] vehicles, its range is only 40% less than the 265-miles of the Model S.