British transport company FirstGroup and Hitachi have joined forces to establish a 50:50 joint venture named NextGen, aimed at procuring batteries for electric buses. The newly formed company is set to purchase approximately 1,000 electric bus batteries valued at around £100 million.
Both FirstGroup and Hitachi have committed £10 million each to the joint venture, with the remaining investment being financed through debt. The initial phase will see the installation of 400 batteries in First Bus buses by 2024, followed by the deployment of the remaining 600 batteries over the subsequent 24 months, completing the project by 2026.
FirstGroup CEO Graham Sutherland emphasized the strategic significance of the partnership with Hitachi, describing it as a major alliance that aligns with the company's ambitious 2035 decarbonization target for its bus fleet. Sutherland highlighted the venture's potential to enhance the electrification of their fleet and depots with increased efficiency and financial transparency. Importantly, the arrangement ensures that FirstGroup retains a significant portion of the residual value in the batteries when they are removed from the buses.
Alistair Dormer, Executive Vice President and Executive Officer, General Manager of Green Energy & Mobility Strategy Planning Division at Hitachi, expressed the company's commitment to climate change innovation. Dormer emphasized the collaborative aspect of the partnership, stating that it enables the use of Hitachi's innovative technologies and global expertise to efficiently decarbonize fleets, identify new revenue streams, and maximize the residual value of assets.
As part of the agreement, Hitachi will provide charging and management services for the 1,000 electric buses powered by the new batteries. Additionally, there is a commitment for an extra 500 batteries and services for electric buses beyond 2026.
This strategic partnership builds upon an existing collaboration between the two companies, as Hitachi already supplies electric trains to First Group's First Rail division.