The change in operation cost is a major concern of bus operators for accelerating bus electrification. The present paper investigated the cost structure of bus fleets with different compositions of electric and diesel buses. Short-run variable and long-run total cost translog functions for mixed fleets were both developed. A panel data set consisting of 58 city bus operators in Taiwan for the 2013–2019 period was formed. The analysis results revealed that introducing a small number of electric buses to a fleet reduced the short-run variable cost of large operators but increased those of small and medium-sized operators. Notably, the overcapitalization of electric buses shifted to undercapitalization when the size of electric bus fleets reached a specific scale. Enhancing the operation scale can reduce the average cost of a bus fleet and enable operators to take advantage of the lower operating cost of electric buses relative to diesel buses.
- economy of capital utilisation
- Electric bus
- fleet composition
- translog cost function