How the ‘Tesla of buses’ went bust

When a door broke loose on a new electric bus in Des Moines, Iowa, and nearly fell off, it was one in a long list of problems for the local transit agency.

The city began using its fleet of seven electric buses, made by the startup Proterra, in 2021. The vehicles soon showed defects in the suspensions, weatherproofing, and wheelchair ramps. After only 18 months of use—and unsuccessful attempts to get the manufacturer to fix the problems—the agency had to pull them off the road.

Other cities had similar issues. In Philadelphia, Proterra buses were sidelined in 2020 after the heavy batteries started to crack the vehicle chassis. (This summer, one of those vehicles started a fire while it was in storage, destroying 16 other buses.) In Austin, 46 new Proterra buses were taken out of service last year as the agency tried to sort out glitches. In Seattle, the buses had charging issues. In Duluth, Minnesota, they struggled on hills. In Miami, dozens of the vehicles now sit unused in storage.

As the buses broke down, transit agencies often couldn’t get the parts they needed for repairs. Then, in late 2023, Proterra declared bankruptcy. An EV company called Phoenix, which makes school buses but had no experience with heavy-duty transit buses, took over Proterra’s bus business, and it got even harder for cities to fix issues. Now, across the country, the buses are stranded in parking lots waiting to be auctioned off for parts. Some buses that cost as much as $1 million new are selling for $20,000.

Proterra’s collapse didn’t just leave cities stuck with expensive new technology that they couldn’t use. It slowed down efforts to cut emissions and made transit agencies more skeptical of climate tech startups trying to reinvent the bus—even though most of the problems had less to do with electrification than with flawed engineering and execution. Here’s what went wrong.

A failed unicorn

Not long ago, Proterra was a rising star in the transit industry. The company, founded in 2004, had been led by a former Tesla executive, Ryan Popple, since 2014. News articles called the product the “Tesla of buses,” and Popple declared that transit buses would be the first vehicles to transition fully to electric.

In a 2016 interview, Popple argued that electric buses would quickly replace diesel. By 2025, he predicted, half of new transit bus purchases would be EVs, and diesel buses would begin to go extinct. “There is no such thing as clean tech,” he said. “Just tech. Proterra is a tech company that has a superior technology for public transit.”

Investors were enthusiastic. Popple himself became involved with the company as an investor in early funding rounds at Kleiner Perkins—his job after Tesla—later stepping in as Proterra’s CEO when the startup needed a new leader.

Over time, Proterra raised nearly $700 million in venture capital from investors including Daimler, General Motors Ventures, and J.P. Morgan. In 2021, the company went public through a reverse merger with a Special Purpose Acquisition Company (SPAC), raising another $640 million. By the end of that year, it had a backlog of around $450 million in orders. It invested $76 million in a sprawling new plant in South Carolina dedicated to making its batteries, in addition to factories it already had in the state and in Southern California.

At its peak, in 2022, the company had more than 1,200 employees. At its Silicon Valley headquarters, just south of San Francisco, engineering teams raced to develop proprietary batteries that could store more energy and charge faster than others on the market.

Politicians saw the company as a leader in advancing the U.S.’s global competitiveness in clean technology. “We’re running way behind China, but you guys are getting us in the game,” President Biden said on a virtual tour of one of the company’s plants in the spring of 2021. “We’re going to end up owning the future, I think, if we keep doing what we’re doing.”

For transit agencies, becoming an early adopter of Proterra’s vehicles was also a way to be seen as a leader, helping cities achieve goals on air quality and climate pollution. The buses cost far more than diesel equivalent. But hefty grants were available from the federal government, states, utilities, and sources like Volkswagen’s Dieselgate settlement money. And, in theory, the lifetime cost of owning the buses should have been lower than diesel, since electricity is cheaper than fuel. No one expected that the buses would be out of use a couple of years after they left the factory.

Reinventing the bus

Like a typical Silicon Valley startup, Proterra set out to upend the status quo. “It was nice to see a new company come in and try to reinvent some things,” says William Haber, the procurement lead at King County Metro, the transit agency in the Seattle area. “The challenge is really how many things they tried to reinvent.”

Rather than making the frame of the bus from steel, like a standard bus, the company decided to use a new composite material that included fiberglass and carbon fiber. The goal was to make the bus lighter, since the giant battery in the bus added so much weight. “It didn’t really reduce weight to the level that they expected or that any of us were hoping that it would,” says Haber. It also created a new challenge: The body of the buses started to crack.  

In Ithaca, New York, the transit agency quickly noticed that the buses were cracking where holes had been drilled through the composite material to mount the rear axle. The holes had destroyed the ability of the material to carry weight, and allowed moisture to get into the material and make it start to rot. “Eventually, what happens is the rear axle just falls off a vehicle,” says Matthew Rosenbloom-Jones, general manager at TCAT, the local agency.

TCAT hired a forensic engineer to analyze the vehicles, who said that it was a basic design flaw. While the cracks could be repaired, they’d quickly reappear. The agency experienced multiple other reliability issues, from the doors to air compressors. After less than two years in use—much of which time the buses were broken down—they had to be taken completely out of service. “We never really even got through the break-in period with these buses before they fell apart,” Rosenbloom-Jones says.

Since Proterra essentially designed the bus from scratch, it also made it harder to find parts when they broke and needed to be replaced. (As its sales grew, pandemic supply chain issues were another challenge.) Agencies discovered that the company was unprepared to provide the level of service that they needed.

“It took them some time to understand how the bus market works,” says Haber. “Once we buy a number of buses, we have to operate them for a minimum of 12 years if you’re using [federal] funding. So then there’s a requirement of support through that 12 years. It was really [about] having a reasonable amount of time to respond when we ran into an issue with the bus.”

The bankruptcy

While the company projected a glossy image, it was struggling. After leading the company for six years, Popple decided to transition back to venture capital in 2020, and was replaced by a new CEO, Jack Allen, formerly the CEO of Navistar, now called International Motors, a truck and bus manufacturer. (Popple remained with the company as an executive director, but submitted his resignation from the board in December 2021; he died a week later of undisclosed causes at the age of 44.)

As the leadership transition happened, revenue was growing, but the company—which had never been profitable—was still burning through tens of millions a year. It had already been facing cash flow problems, and the pandemic added to the challenge with supply chain disruptions. The cost of shipping, materials, and labor rose.

To qualify for federal grants and tax incentives, the company had to use a certain percentage of American-made parts, including batteries, which also kept the cost of production high. The company struggled to keep up with production, and by 2022, had an even bigger backlog of orders. At the same time, it was facing a deluge of warranty claims from agencies across the country as the buses sometimes literally fell apart.

In August 2022, the company’s CFO told investors it had the “balance sheet to ride out potential economic turbulence,” with more than $500 million in cash. But the company later announced a net loss of $81 million for the fourth quarter of the year.

In August 2023, as the financial pressures mounted, Proterra filed for Chapter 11 bankruptcy, saying that it intended “to continue to operate in the ordinary course of business.” A few months later, Volvo bought the battery manufacturing arm of its business for $210 million.

Cowen Energy, one of Proterra’s backers, acquired the company’s charging infrastructure technology (the company did not respond to requests for comment). Phoenix, a small California-based manufacturer of electric medium-duty trucks and school buses, bought the company’s bus business for $10 million, a tiny fraction of the VC money that had been invested in it.

This year, the company’s estate agreed to a $29 million settlement in a lawsuit with investors who said that they had been misled about financial risks and production inefficiencies.

Transit agencies can’t make repairs

After Proterra’s bankruptcy, making repairs became more challenging. Agencies struggled to get help from Phoenix, which had no previous experience working with transit buses. (Phoenix did not respond to multiple request for an interview). Though Phoenix appears to be growing—in June 2025, it announced that it was taking over a 1.6 million-square-foot EV manufacturing facility in China to make electric cars for international markets—transit agencies say that it’s been difficult to get the company to return calls about repairing buses.

Some specialty parts became less available. “The aftermarket suppliers fell off the map,” says Coree Cuff Lonergan, CEO of transportation for Florida’s Broward County. “So we were unable to get the supplies to fix the buses.” The county’s Proterra buses broke down as much as seven times as often as its standard diesel buses.

“The ability to get parts and service for them was made significantly more challenging by Proterra’s bankruptcy,” says Michael Schmieder, director of Everett Transit in Everett, Washington. “Critical components were not available. Proprietary software made servicing them ourselves difficult and at times impossible.”

Some agencies have more resources than other for repairs; King County Transit, for example, even has staff that can make repairs to battery cells. The smallest agencies have been hit hardest. In the small college town of Iowa City, Iowa, which has four Proterra buses, the entire fleet has been parked for a year and a half because the transit agency can’t get parts.

It’s critical for electric bus manufacturers to offer robust support and warranties that go well beyond what manufacturers would offer for a passenger EV, says Matthew Lichtash, an EV and clean energy consultant at PA Consulting. An electric car might offer a battery replacement if the range decreases to 70%, for example—but a bus might need a replacement sooner. “That might be fine if you own an electric car and you’re driving around town,” he says. “But if you bought a 200-mile [range] bus and it’s now a 150-mile bus, that’s going to introduce a lot of challenges.”

It’s a clear example of the fact that vision and innovation isn’t enough for a climate tech company to succeed—service networks, supply chains, and institutional reliability also need to be firmly in place.

Are electric buses ready?

For many agencies, the biggest problem wasn’t the fact that the buses were electric, but the fact, they say, that the company didn’t seem know how to build a bus or support it. A bus driver who had driven the vehicles told me that she thought it was obvious Proterra was more a battery company than a bus maker, judging by the mistakes they’d made.

All of those basic flaws were very unusual. “We’ve rarely, if ever, experienced a situation where a bus that we purchased cannot make it to the end of its useful life,” says Erin Hockman, chief strategy officer for the Des Moines Area Regional Transit Authority.

Still, some agencies had problems with the electric system, too. Many said that in cold weather, the range of the batteries dropped significantly. Others had trouble with charging, particularly in some of the company’s earlier designs. Some agencies had difficulty setting up the charging infrastructure needed to support the buses.

For some agencies, the experience pushed them to wait on electric buses in general. “We’re always open to new technology as it evolves, but in the electric space, at least in the U.S. market, we have not seen the reliability yet,” says Broward County’s Lonergan. “And given our current experience, we’re not willing to make those investments at this time.”

Several others have bought new electric buses from other companies like Gillig, a long-time bus manufacturer which began selling electric busses in 2019. In Everett, where half of the city’s fleet is now made up of electric Gillig buses, the vehicles have performed well, and any issues have been easier to address.

Proterra had touted its “clean sheet” approach to redesigning buses. “Your opportunity is to exploit the bias these large industries have to not innovate,” Popple said in one early interview. “They are fat, dumb, and happy. Focus, concentrate, and out-work them.” But legacy manufacturers had the experience to make vehicles that worked. (At the same time, battery technology keeps improving, helping make it easy for other manufacturers to electrify.)

“Gillig has been in the business a long time, and they have a robust service partnership with Cummins and others that makes getting service and support so much easier, timely, and familiar,” says Schmieder. “Transit vehicles are a complex array of systems that take a beating every day while in service. Even hybrid buses and diesel buses have issues. The issues with the eGilligs have been slightly more pronounced, but our support from Gillig and their network has been rock solid.”

Like other electric vehicles, the technology continues to improve. Heat pumps may soon be available in buses, for example, which can help dramatically improve the range in cold weather. Battery range keeps getting better. And Chinese buses are still farther ahead. Shenzhen, China, a city larger than New York, transitioned to 100% electric buses eight years ago.

In other countries that are importing Chinese electric buses now—unlike the U.S.—the buses are noticeably better. Santiago, Chile now has thousands of electric buses in its fleet. “You just don’t see the type of reliability issues there that you’ve seen in North America,” says PA Consulting’s Lichtash. One of the reasons, he says, is that Chile has “relied a huge degree on Chinese suppliers. And I think there is a tension here in the U.S. between geopolitics and reliability.”

The fate of the Proterra buses

Some agencies took the Proterra buses off the road before they’d been in use for two years so that they could still qualify for a warranty; in some cases, negotiations were underway when Proterra declared bankruptcy. Now, it’s not clear whether the bankruptcy estate or Phoenix, the company that took over the business, can honor those warranties. Several agencies are in the middle of lawsuits and declined to comment on those proceedings.

Others chose not to continue trying to wrangle compensation or repairs. “We would probably spend a lot of legal fees and probably not get anything, even if we did get a judgement,” says TCAT’s Rosenbloom-Jones. “Is it really in the public interest to chase someone around? Or do we just want to wash our hands and be done?”

When we spoke, TCAT, like several other agencies, had been waiting for a federal waiver that would allow it to auction the buses. (The waiver is necessary in cases where agencies used some federal funding; some of the proceeds from the auction will go back to the government.) Since the buses aren’t functional, they’ll be sold for parts and scrap.

In the meantime, across the country, the sleek, nearly new vehicles have sat unused for months or years. In TCAT’s case, they were moved to a field after the agency determined that they were a fire risk and could cause more even more problems. “We made the decision to get them off the property and far away,” says Rosenbloom-Jones.

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