Leading U.S. electric bus maker Proterra has closed a Series E funding round with $140 million.

That marks a significant increase from the $30 million Series D round that closed in June 2015, which brought the company’s VC investments to $150 million*. The latest round featured some familiar faces, including Tao Capital Partners, Kleiner Perkins Caufield & Byers, GM Ventures, Constellation Technology Ventures, 88 Green Ventures and Edison Energy, Inc. An undisclosed investor led the round with $40 million and new investors brought $60 million.

The company will use the capital to scale its bus manufacturing more rapidly as it takes on the incumbent diesel-bus market with a cleaner, quieter alternative. Proterra plans to begin production at its new West Coast factory in Los Angeles County in early 2017.

Orders in the last year overwhelmed the sales plans in place at the Greenville, South Carolina factory, CEO Ryan Popple said in an interview.

"We were planning for a lot of growth and put in an aggressive target, and that target ended up being short by 50 percent," he said.

Proterra targets public transit agencies in the U.S. and has sold some 300 buses so far. Some veteran bus makers, like Nova Bus and New Flyer, have applied their expertise to electric bus lines, but Proterra is the furthest along at building an electric bus from scratch.

The light composite frame allows for greater range from the batteries compared to a retrofit that puts them on a heavy metal bus frame. Proterra’s latest drivetrain hit 350 miles of nominal range.

Chinese electric bus maker BYD poses a potential threat, having shipped its 10,000th e-bus in 2016, but Popple doesn’t see it as direct competition. The Chinese market is heavily subsidized by the central government, which drives sales for an “underpowered, overweight, short-range vehicle” that wouldn’t be able to compete in U.S. markets, he said.

[Jan. 5 -- A spokesperson for BYD tells GTM that Popple's critique of the Chinese e-bus industry is overly broad, and that BYD has, in fact, sold 303 buses in the U.S., giving it a leading role in the market.]

In describing its competition, Proterra sets its sights on the incumbents.

“Our market share is really high for electric buses, so we’ve started to measure it against all buses,” Popple said. “For us, it’s about replacing every loud, stinky diesel bus on the road.”

Proterra finished 2015 with 1 percent of new bus orders in the U.S., the company said, but is expecting that number to reach 5 percent when 2016 sales are tallied up.

Diesel buses had an upfront cost advantage, but Proterra has been closing the gap as battery prices have continued to fall and production has scaled up. The e-bus also promises lower operations and maintenance costs because the fuel is electricity and electric drive trains suffer less wear and tear.

In October, Proterra announced a no-money-down leasing model, which created the opportunity to do deals with private companies that don't have the budget to cover capital expenditures or the will to own the buses, like the transit agencies. In the first of such deal, Proterra leased 10 buses to real estate company Jones Lang LaSalle to serve two buildings in Chicago.

Proterra's ability to win over customers was a draw for Obvious Ventures, which invested $5 million in the new round.

"People who are trialing these things are jumping in whole hog and moving on to large purchasing programs," said Andrew Beebe, managing director at Obvious. The company had been on his radar for a while, but he was waiting to see the price of batteries drop so the economics of the buses could improve.

With lithium-ion prices continuing to fall, Proterra enjoys a sizable head start.

"Once competitors realize how rapidly this market is about to change, people will rush in," Beebe added. "But these guys have a multiple-year lead on competitors who are out there."

As for next steps, Proterra has its work cut out in spending the newfound capital on its production expansion, and continuing to improve the product through R&D. This funding round could prove to be a pre-IPO round, Popple noted, but he's not in any rush. "If you can obtain the growth capital you need, there's no need to rush to public capital," he said.

The company got that growth capital, and had to turn away some who wanted to invest.

"We want to and have to grow faster than we planned to grow, and we were planning on doubling every year," Popple said. "We have to think about, how do we efficiently and profitably continue to grow, and grow at a rate most industrial companies never see?"

*This story has been updated with a more accurate tally of Proterra's equity investment rounds.