Berlin Economics, a German economic consultancy, has presented a study on the industrial potential and development prospects of electric public transport in Ukraine, prepared in partnership with the Center for Transport Strategies (CFTS) and the Vision Zero non-governmental organization, and with support from the European Climate Foundation (ECF).
The study was officially presented in Kyiv against the backdrop of the formal launch of Ukraine’s EU accession negotiations and preparations for the Ukrainian Recovery Conference in Gdańsk. It was therefore natural that the participants in the presentation emphasized that strengthening energy and transport infrastructure is not only an opportunity to renew public transport fleets, but also a comprehensive pathway to Ukraine’s recovery, offering significant prospects for business development, stimulation of domestic demand, and expansion of export opportunities.
The study, conducted by Berlin Economics in partnership with the CFTS and Vision Zero with support from the ECF, assesses the development potential of the electric public transport sector, identifies barriers that could hinder its growth, and outlines measures to overcome those barriers and make the sector a pillar of the country’s recovery and integration with the European Union. The study’s primary objective is to develop a comprehensive strategy for developing Ukraine’s electric public transport manufacturing sector.
As Ukraine’s Deputy Minister of Development of Communities and Territories Maryna Denysiuk noted during the discussion following the presentation, which was held in partnership with the German-Ukrainian Chamber of Industry and Commerce, "The issue is not only about purchasing new buses or trolleybuses, but also ensuring that these investments support the Ukrainian economy, create jobs, and strengthen our industrial capabilities."
An expert with Berlin Economics shared this view: "Electric public transport is a sector in which Ukraine possesses significant innovation potential, which must be harnessed properly and directed in the right context. It is necessary to develop key concepts that can be integrated into value chains. This is critically important in this area."
Infrastructure first, then rolling stock
Support for public electric transport cannot be viewed solely as an environmental measure or as isolated procurement of trolleybuses, trams, or electric buses. Rather, it is a matter of service quality, passenger accessibility, barrier-free mobility, energy resilience for local communities, lower operating costs, and the modernization of urban infrastructure, Denysiuk emphasized.
According to data from the DREAM (Digital Restoration Ecosystem for Accountable Management) system, the needs of all Ukrainian communities in this area currently exceed UAH 480 billion.
"This is an enormous figure, even an unattainable one at this stage," Denysiuk said. "Meeting these needs over the next decade will require mobilizing all available sources of financing. The program is aimed at modernizing urban electric transport systems, including through the renewal of infrastructure, rolling stock, and related facilities."
As Ukrainian cities renew their electric transport fleets, it is important for them to move away from the logic of purchasing individual vehicles and toward implementation of comprehensive transport projects, Denysiuk emphasized.
"If a city procures electric buses, trams, or trolleybuses, it must simultaneously plan its route network, charging and overhead contact infrastructure, depots, power supply capacity, maintenance systems, and personnel training, the introduction of electronic ticketing, GPS monitoring, and service-quality control," she said.
Addressing the issue of power outages caused by enemy attacks, Denysiuk stressed that these circumstances are temporary. The launch of Ukraine’s EU accession negotiations, which will involve implementing directives to reduce greenhouse gas emissions, obliges the country to transition to electric transport to make cities cleaner.
"Military risks and uncertainties do not halt the European integration process. This applies to the public electric transport sector as well," she said.
Strengthening the value chain
Presenting the study’s findings, Berlin Economics expert Yiğit Tahmisoğlu noted that Ukraine already has a manufacturing base for electric buses, diesel buses, trolleybuses, and trams. "If we implement adequate programs, we will be able to strengthen this sector, reinforce the value chain, and develop a new generation of skilled personnel. The study demonstrates how this can be achieved," he said. The experts estimate that production in this sector could increase by 15% as early as 2027 and that finished products could be exported to Africa and Asia.
According to Tahmisoğlu, this process should be driven by factors such as restoring and reinforcing the value chain, meeting the demand on the domestic rolling-stock market, and modernizing public transport and related infrastructure. "We see a strong emerging manufacturing base in the electric bus segment. We can also leverage the expertise and capabilities developed in diesel-bus manufacturing and direct these resources toward the production of electric buses to reach a competitive level," Tahmisoğlu said.
At the same time, he noted that Ukraine already has a robust manufacturing base for battery-powered trolleybuses. This generates high added value at higher stages of manufacturing, and efforts can be made to improve integration across all manufacturing sectors and scale up production to meet the country’s public transportation needs.
Many types of trams manufactured in Ukraine have localization rates ranging from 48% to 95%, Tahmisoğlu noted. According to him, development in this area could enable the renewal of aging fleets and expansion of existing manufacturing capabilities. Particular attention should be paid to strengthening the domestic production capacities for components and spare parts, which would also facilitate Ukraine’s integration into the European market.
Among the obstacles hindering the development of the electric transport market, Tahmisoğlu identified insufficient financial support. "State support is inconsistent, and the market relies on foreign investors," he said. He also underscored the importance of developing battery manufacturing, noting that the study even identified a reduction in investment in this area.
Another obstacle is the absence of a general policy for the development of the electric public transport sector. "Manufacturing orders are declining, power substations are quite outdated, and so is infrastructure," he said. "When new trolleybuses or trams are procured but operated on outdated infrastructure, the expected technical performance levels of the new vehicles are not achieved."
The study shows that virtually all Ukrainian cities currently depend on external borrowing to finance public transport renewal projects. Access to credit is slow, with the first tranche often taking up to nine months, while tender procedures remain excessively prolonged.
However, certain requirements for the electrification of public transport do exist and are quite realistic. Cities above certain population thresholds have an obligation to reduce greenhouse gas emissions, while larger cities face even greater requirements. National policy promotes the transition to electric transport. There are plans to purchase 9,000 electric transport vehicles with European credit facilities. However, Ukraine also lacks modern municipal mobility plans that could form a part of a broader national strategy.
The study further emphasizes that insufficient financing also limits Ukraine's export potential in the electric transport sector. Before the war, Ukraine exported trams and small diesel buses to Egypt. Today, certification is the primary barrier to possible exports to the European Union. Certification requires more than EUR 1 million and between 1 and 2 years of testing in European markets. However, this area currently receives no funding in Ukraine, leaving domestic manufacturers at a competitive disadvantage. European manufacturers have a competitive advantage because they can provide 7-8 years of maintenance support for electric transport vehicles, whereas Ukrainian manufacturers cannot offer support over such extended periods. Although Ukrainian manufacturers may currently offer lower prices, they lack access to foreign markets due to the lack of EU-approved technologies for batteries and other components. As a result, European manufacturers currently dominate these markets. There is also fierce competition from China.
However, Europe plans to expand its electric public transport fleet, and nearly 1,000 projects to manufacture batteries for electric vehicles are currently under development. According to the study, Ukraine has a strong position in this segment and can compete in the trolleybus market under the most favorable scenario. If the development of Ukraine’s electric transport manufacturing industry follows this scenario, it could generate an additional EUR 387 million in value added for the economy. Additional benefits would also result from a reduced need to purchase diesel fuel, resulting in potential savings of between EUR 9 million and EUR 15 million.
The challenge of long-term planning
Manufacturers also emphasized the importance of a systematic approach to financing and long-term planning.
"We all talk about investment, but investment without a guaranteed sales market is very risky," said Natalia Bachurna, Sales Director of the Chernihiv Automobile Plant. "The classic manufacturing model is based on assessment of projected demand. It is possible to produce for inventory and create a buffer stock. It is also possible to establish long-term production. However, the electric public transport market is highly dependent on specific contracts. We cannot manufacture a certain number of vehicles for stock because each customer, whom we know personally, orders every unit with specific technical requirements. We do not know what kind of contract a particular community will have or what features and innovations it will want to see."
This approach to manufacturing public transport vehicles requires substantial working capital and extensive supply chains for components, including imported parts. According to representatives of the Chernihiv Automobile Plant, procuring components alone can take between three and six months. Therefore, without multi-year contracts for renewal of rolling stock from municipalities, it is difficult to speak of effective strategic planning. "We have a short production cycle and instability. If the government were to develop guaranteed multi-year public procurement plans, it would help drive the industry’s development forward," Bachurna said.
She also confirmed the study’s findings that tender procedures for procuring public transport vehicles for Ukrainian cities with funds from international donors are lengthy. "If we submit a tender bid in 2024, we may not reach the contract stage until 2026, while the price offer remains unchanged. This requires significant financial resources, including the cost of very expensive bank guarantees," she said
At the same time, she said that the company she represents has developed a prototype electric bus, but there are currently no orders for it. The manufacturer has also implemented a tram modernization program that allows operators to retain existing bogies while reducing electricity consumption by up to 40% compared with older vehicles. Such modernization projects were once popular in the Czech Republic and Switzerland. Their cost is two to three times lower than purchasing new trams. Yet, once again, there is a lack of orders. Customers are either waiting for financing to purchase new vehicles or attempting to carry out similar modernization projects in-house.
Natalia Svystun-Smoliak, deputy director of the Khmelnytskyi municipal enterprise Electrotrans, emphasized the importance of establishing manufacturing and maintenance facilities within municipal public transport enterprises.
Khmelnytskyi established its own industrial training facility in 2022. Students from higher vocational schools in related professions - including electricians, welders, and bodywork technicians - were recruited and offered practical training opportunities, thereby strengthening the dual-education model. The enterprise also works closely with Khmelnytskyi National University, specifically its Faculty of Engineering and Department of Mechanical Engineering Technologies. Leading lecturers in engineering disciplines are employed there on a part-time basis. This helps address labor shortages resulting from military mobilization.
"It is impossible to talk about transport development without discussing who will actually implement it," said Svystun-Smoliak.
The loan that Khmelnytskyi received from the European Bank for Reconstruction and Development (EBRD) for fleet renewal amounts to EUR 16.555 million. This amount includes EUR 10.6 million in loan funds, EUR 4.555 million in grants, and EUR 1.5 million in co-financing by the city council. Half of the funds were spent on the procurement and renewal of transport vehicles. The Chernihiv Automobile Plant has already delivered all the 44 new vehicles it manufactured. The remaining funds are earmarked for the comprehensive modernization of maintenance facilities. Thus, the city has a clearly defined step-by-step modernization program, developed in cooperation with international institutions, extending through 2029.
"With our own resources, we can renew no more than 20% of anything," said Svystun-Smoliak. "We have 10 traction substations in the city. Their operation is already controlled through telemechanics, but we also need to replace the traction switching equipment, which is extremely expensive. We are planning these steps in coordination with European donors."
She noted that the study highlights the implementation of automated fare collection systems (AFPS), passenger flow monitoring systems, and digital dispatching systems. "We implemented AFPS in the electric transport system in 2021. Our electric transport system is entirely cashless. The new trolleybuses, as well as some older Bogdan trolleybuses, are equipped with passenger-counting systems. This allows us to compare AFPS payment data with actual passenger flows. I know that only a few cities have this capability, but we do," she said.
According to Svystun-Smoliak, the city is working to implement sustainable mobility solutions.
"Electric transport is a special mode of transport, and we are succeeding in building a more positive public perception of it," she said. Currently, trolleybuses have become especially popular for private hire for birthday celebrations and graduation events. The city has equipped each vehicle with unlimited broadband Internet access to lure students and schoolchildren away from private transport operators. "We have seen an increase in the share of fare-paying passengers," the municipal enterprise representative stated. "Everyone is going for new rolling stock."
Although Ukraine continues to deal daily with the consequences of Russia’s destructive attacks, now is the time to fundamentally rethink urban mobility and its role in ensuring quality of life in cities, according to Serhii Vovk, director of the Centre for Transport Strategies (CFTS). He emphasized that the urban public transport system is inherently complex because it encompasses both municipal and privately operated services.
"It is precisely cooperation, not competition, that should be the cornerstone of transport policy development," he said. "It is absolutely unacceptable when we hear that our municipal transport system is fully digitalized while fixed-route bus services continue to operate on a cash basis in the shadow economy. Under such conditions, it is difficult to speak of genuine competition."
Another issue is the integration of different transport modes. Cities are developing actively, new modes of transport are emerging – many of which remain either unregulated or only partially regulated – while suburban transport services are also being added to the mix…
"All these modes should ideally be integrated into a single system so that cities can clearly understand where they are heading and how they are developing," said Vovk.
At the same time, he drew attention to entirely new challenges associated with the war, particularly in the context of demographic changes. As a result of internal migration from the eastern and central regions of the country, cities in western Ukraine have received large numbers of new residents, creating new passenger flows that need to be taken into account. Another very important issue is energy infrastructure, which is also currently undergoing active restructuring.
"Transport, as one of the main energy consumers in the city, should also serve as a key driver in shaping this system," the expert said.
The Berlin Economics study provides a solid foundation for the development of Ukraine’s electric public transport market, both in terms of domestic demand and export opportunities, and in terms of supply of new and modernized vehicles and Ukrainian-made infrastructure solutions. The experts involved in the study emphasized that, with consistent and adequately funded government support, the same volume of investment could expand domestic manufacturing capacity, reduce emissions, and position Ukrainian manufacturers within the European urban transport value chain over the next decade.
