A tiny startup is quietly trying to become the Tesla of buses

A Silicon Valley-based startup is making serious moves to become the Tesla of buses.

Proterra has quietly been working on all-electric buses since 2004. In 2009, it made its first sale: three buses to Foothill Transit in Southern California.

Flash forward to 2017 and the startup has raised over $140 million in venture funding, opened its second manufacturing plant, and sold a total of 400 buses. Proterra is looking to go public at some point this year or in 2018, Bloomberg reported.

In essence, Proterra is rapidly becoming the next alternative transportation startup to keep an eye on.

A range on par with diesel

Proterra started hitting its stride in 2015 when it sold 62 buses across 12 different transit agencies. But arguably its biggest move occurred in September when the startup unveiled its brand new, long-range electric bus.

Called the Catalyst E2, the 40-foot bus can drive 350 miles on a single charge on typical test track conditions. That means the buses can operate for a full 18 hours, the same as a diesel bus.

The Catalyst E2 is a major improvement from Proterra's first-generation bus that had a range of just 146 miles.

Matt Horton, chief commercial officer of Proterra, told Business Insider that sales have grown because of the bus' longer range.

"All sorts of transit agencies are now realizing that there really is a vehicle now that can handle all of the routes in their transit systems, which is something they could never claim before," Horton said.

Since the close of 2015, Proterra has sold 239 buses, bringing its total to 384.

Proterra announced in January that it made its largest sale to-date - 73 buses to King County Metro Transit in Seattle, totaling $55 million.

"We intend to build well over 100 vehicles this year. That would certainly be more than double what we did in 2016," Horton said.

Altogether, Proterra has sold buses to transit agencies in 36 different states. This includes transit agencies in major cities like New York, Washington D.C., Los Angeles, and Chicago, which have either bought Proterra buses or will finalize a sale with the startup in the next 12 months, Horton said.

Expansion in 2017

Proterra is looking to expand going forward. The electric bus startup manufactures its buses at a plant in Greenville, South Carolina, but recently opened a second manufacturing facility hear Los Angeles. Proterra will begin production at its LA plant in March.

Josh Ensign, a former vice president of manufacturing for Tesla, joined Proterra as chief operating officer in September. He is tasked with scaling operations at the Greenville plant and starting production in LA as the startup looks to ramp up production.

Proterra now has the capacity to build 500 buses a year between its two facilities, Horton said.

Earlier in January, Proterra secured $140 million in its fifth round of funding. According to Crunchbase, the latest round brings Proterra's total funding to $322 million.

Proterra said the funding round was led by $40 million from an undisclosed investor. The other $60 million came from several new and existing investors that include Tao Capital Partners, Kleiner Perkins, and GM Ventures.

Proterra doesn't disclose its revenue or the valuation of its latest funding round. But it's ramping up production at a time where electric vehicles are starting to displace demand for oil and coal.

A study by the Grantham Institute at Imperial College London and independent think-tank Carbon Tracker Initiative looked at cost forecasts for electric vehicles and solar panels and found that their falling cost will halt the growth in demand for coal and oil starting in 2020.

The study says fossil fuels could lose 10% of market share to solar panels and electric vehicles in the next decade.

It's a trend Horton said he is already starting to see that should bode well for Proterra's future.

"In large part, the reason this transition to all electric is going to go so fast is that the economics of battery-electric buses are incredibly strong," he said. "It is a better long-term investment economically."