Merriam-Webster defines the noun ‘revolution’ as “a sudden, radical, or complete change; a fundamental change in political organization; activity or movement designed to effect fundamental changes in the socioeconomic situation; a fundamental change in the way of thinking about or visualizing something, a changeover in use or preference especially in technology” . Choosing to specify the versatility of the definition and isolating it from its celestial use allows the proper reconstruction of the description of the noun’ revolution.’ A ‘revolution’ is nothing more than a dramatized version of using a particular word to describe the accelerated changes occurring in the surrounding. Sometimes too fast to understand, but often unignorable. These accelerated changes can be economic, social, or political but hold a common principle, i.e., fundamental. They fundamentally look to address a particular dialogue.
The dialogue that has taken 2020 by storm is electric vehicles or EV’s. Due to climate concerns, many governing bodies are actively pursuing avenues to encourage and incentivize consumers and businesses to invest in the automotive infrastructure’s electrification to reduce the burden on the environment. A previous essay titled “Electric Mobility,” a historical context and overview of how the automobile industry’s electrification is not a recent trend but an overlapping one. Tesla (TSLA) has been a complex organism operating in the marketplace, and its year to date performance is nothing short of remarkable and astonishing. A litany of commentary can be ascertained, claiming how Tesla (TSLA) does not justify its market evaluation. Regardless, the inclusion of Tesla (TSLA) into the S&P500 automatically includes Tesla (TSLA) into millions of 401k and retirement mutual funds. In 2005, Amazon (AMZN) was added to the S&P500 at a time when, “despite the Internet’s enormous influence, shares of only two other prominent Net companies are included in the S&P 500: search engine and portal Yahoo Inc. (purchased by Verizon Communication in 2017) and online retailer eBay Inc (EBAY). ” . Tesla would join the likes of Aptiv (APTV), Cummins (CMI), General Motors (GM), Fiat Chrysler Automobiles (FCAU), LKQ Corporation (LKQ), Ford (F), Genuine Parts Company (GPC), Borgwarner (BWA), and Goodyear Tire and Rubber Company (GT). A keynote to be reminded about the S&P500 is that it is Capitalization-Weighted Index, meaning that it “is a type of market index with individual components, or securities, weighted according to their total market capitalization” . As reported for Forbes Advisor by Taylor Tepper, compared to Apple (AAPL) at 6.5%, Tesla will comprise slightly more than 1%, and that the inclusion of Tesla will “complement the shares of the 499 other companies included in the S&P500 helping to provide the kind of long-term, diversified growth funds are known for . Correlating inclusion with validation is difficult but can be attempted with the premise that there is a new market participant in town—an extremely fluid investor whose approach is derived from experiences rendered in the 20 years of the 21st century.
A significant variable that factors into investment decisions for the 21st-century investor is ESG: Environmental, Social and Governance. “Robo-advisors such as Betterment and Wealthfront have also used them to appeal tho these investors” . ESG scores are produced by agencies and are readily available to evaluate a company’s societal impact for better investment assessment. A report titled, ‘Passive Sustainable Funds: The Global Landscape 2020‘ published by the financial research firm Morningstar reports that there were 534 sustainable index mutual funds and exchange-traded funds globally, with collective assets under management of $250 billion with Europe the largest market and the United States representing 20% . It must be underscored that there is no universal law or benchmark to assess ESG ratings, reported by James Mackintosh in ‘Is Tesla or Exxon More Sustainable? It Depends Whom You Ask’. Mackintosh states, “Investors should not treat ESG scores as settled facts to be used on their own, but as potentially worthwhile analysis that needs to be understood before being acted on” . The promise of a society that does not rely on fossil fuels is promising and urgently needed. A stock price is nothing more than a combination of company financial fundamentals and market sentiment. The current market sentiment is accepting of a future where reliance on fossil fuels is minimal and, the construction of one-time fantasies can be possible. Multiple projects and the company’s mission statements reflect the urgency they are using to create sustainable solutions for systemic problems.
Upon review of the February 2020 Average Annual Vehicle Miles Traveled by Major Vehicle Category and Average Fuel Economy by Major Vehicle Category published by the Alternative Fuels Data Center, an inverse relationship can be proposed between annual vehicle miles and fuel economy. Moreover, a particular vehicle category attracts further inspection compared to others; it is the yellow school bus. Do they have to be yellow? Well, no, but it is recommended according to the Highway Safety Program Guideline No.17, Pupil Transportation Safety IV.B.1.b. “All school buses should: be painted National School Bus Glossy Yello, in accordance with the colorimetric specification of National Institute of Standards and Technology (NIST) Federal Standard No.595a, Color 13432, except that the hood should be either that color or lusterless black, matching NIST Federal Standard No. 595a, Color 37038” . The sight of an acute shade of yellow and black container waiting at the end of the street for young minds to board and embark on a journey was a common practice before the pandemic. In July 2020, the news of the loss of Joanna Cole, the author of the children’s book The Magic School Bus, sparked a curiosity. While the “core idea of a sweet and nerdy crew of schoolchildren taking field trips into scientific concepts, bodily parts, into space and back to the age of dinosaurs — and always led by their teacher, the intrepid Ms. Frizzle”  was amusing, it was the incorporation of the yellow school bus that isolated it. While Ms. Cole could have chosen to use any shade, she employed the iconic yellow shade to assimilate the relatable container to millions of young minds. The iconic yellow shade is hard to dissociate and allowed for an opportunity for a market inspection.
According to the National Highway Traffic Safety Administration and Bureau of Transportation Statistics, “students are about 70 times more likely to get to school safely when taking a bus instead of traveling by car. That’s because school buses are the most regulated vehicles on the road; they are designed to be safer than passenger vehicles in preventing crashes and injuries” , and as of 2017, there were 983,232 buses in the United States , respectively. The school buses’ different variations are Type SSV, Type A, Type B, Type C, Type D . In August 2020, 21WFMJ, an NBC/CW-affiliate station from Ohio, shared, School Bus Market Size, Share 2020 Global Industry Future Trends, Growth Key Factors, Demand, Business, Sales & Income, Manufacture Players, Application, Scope, and Opportunities Analysis by Outlook – 2023. The article lists the top key players of the School Bus Market as Ashok Leyland Ltd (India), Blue Bird Corp (USA), Daimler AG(Germany), REV Group (USA), and Tata Motors Ltd. (India). Out of the companies listed, REV Group (REVG) and Blue Bird Corporation (BLBD) are publically traded companies in the United States. Major automobile manufacturers such as Ford (F) and General Motors (GM) manufacture buses as well, but REV Group and Blue Bird Corporation (BLBD) represent and a specialized dissection of the larger pie. Although Blue Bird Corporation (BLBD) is a pure-play bus manufacturer, REV Group (REVG) is a holding company that operates the Collins Bus Corporation. Daimler AG, the German conglomerate, operates the Thomas Built Buses under the Daimler Trucks North America division.
The brief overview of manufacturing participants allows formulating a rubric to understand the ethos. In The Longer Route to School, the Bureau of Transporation Statistics states that “20 percent of low-income families own no vehicles and the majority (70 percent) of children from these families take a school bus to school . The Bureau also cautions that, “vehicle ownership does not necessarily mean vehicle availability, … the majority of children (60 percent) from low-income, vehicle owning households continue to take the school bus instead of a private vehicle” . In the equation called the school, a school bus highlights itself as a critical variable in many lives. As mentioned earlier, school buses are not the most fuel-efficient vehicle, but due diligence revealed that, like the electric car, electric buses had been around for a long time. In 1994, Blue Bird Corporation (BLBD) was the first to the market with their electric school buses . In their recent earnings call, President and Chief Executive Officer Phil Horlock stated that, “ We saw substantial growth in our electric-powered bus sales this year, with 158 buses sold and a strong growth runway in that segment. Our alternative-fuel market share remained strong in fiscal 2020, led by propane at 76%, followed by electric at 58%, and we maintained our position as the undisputed leader in alternative fuels” . As reported by the National Center for Education Statistics, the average expenditure per student transported is $943, which, compared to 1980-1981, is approximately 376 percent more . This spending looks highly unsustainable. The Electric School Bus has offered participants an opportunity to alter practices to carve at the lack of fuel efficiency and the burden of emissions.
Furthermore, the bus can house a bigger battery than an electric car, which presents them with an extraordinary opportunity: connect to the electric grid. Mr. Horlock states, “Electric buses built by Blue Bird are now equipped with vehicle to grid (V2G) capability, allowing communities to use the electric buses as back-up power sources in emergency situations, as well as revenue generators through selling electricity back to the grid while the bus is plugged in during peak power use times” . Furthermore, in terms of cost reduction, in an interview with the New York Times, Tim Shannon, the director of transportation for Twin Rivers School District, which operates a total of 27 electric buses in Sacramento, California, said that “the fuel costs for a diesel bus were about 85 cents per mile, as opposed to 19 cents for an electric bus” . This revolutionary deviation from the norm of ‘pupil transportation’ avails an unscripted version of the electric grid and the school bus than what we currently see. While the pandemic has upended the classroom environment and forced it digital, dismissing the in-class climate’s influence on students’ growth is foolish, benign, and cynical. In an age where many norms are fragile, infrastructure should not be. Infrastructure spending has been a popular talking point for a long time. With crumbling infrastructure, appropriated with D+ awarded by the American Society of Civil Engineers , positive measures such as the school bus fleet’s electrification can serve fruitful future results.