On Monday July 15th 1907 an unusual bus picked up its first passengers at London's Victoria Station before gliding smoothly off to Liverpool Street. It was the beginning of what was then the world's biggest trial of battery-powered buses. The London Electrobus Company had high hopes that this quiet and fume-free form of transport would replace the horse. At its peak, the company had a fleet of 20 buses. But despite being popular with passengers the service collapsed in 1909. The history books imply that the collapse was caused by technical drawbacks and a price war. It was not. The untold story is that the collapse was caused by systematic fraud that set back the cause of battery buses by a hundred years.

London Transport Museum /Transport for London

Indeed, the London electrobus trial remained the largest for the rest of the 20th century. Only recently has American interest in keeping city air clean encouraged trials on anything approaching the same scale. For the past 15 years Chattanooga has had a dozen battery buses. Today the world's biggest fleet, excluding minibuses, is in Santa Barbara, California. The city has 20 buses and is buying five more.

On any rational assessment of the technology the electrobus had a good chance of success. The replacement of horses by internal-combustion engines may now look to have been inevitable, but it certainly did not seem so at the time. At the beginning of 1906 there were only 230 motor buses in London. They were widely reviled for their evil smells and noise. At any one time a quarter of them were off the road for repairs. In 1907 The Economist predicted “the triumph of the horse”. The future of public-transport technology was up for grabs.

The paradox at the heart of the electrobus story is that the electrobuses themselves were well engineered and well managed. All battery buses have a limited range because of the weight of their batteries. The electrobus needed 1.5 tonnes of lead-acid batteries to carry its 34 passengers. It could travel 60km (40 miles) on one charge. So at lunchtime the buses went to a garage in Victoria and drove up a ramp. The batteries, slung under the electrobus, were lowered onto a trolley and replaced with fresh ones. It was an extremely slick operation that took three minutes. “It just goes to show there's nothing new under the sun,” says Mark Hairr, of the Advanced Transportation Technology Institute. “That's almost exactly what we do here in Chattanooga. And we knew nothing about this.”

In April 1906 the London Electrobus Company floated its shares on the stockmarket. It wanted £300,000 to put 300 buses on the streets of the capital. On the first day the flotation raised £120,000 and the share offer was on course to be fully subscribed. But the next day some awkward questions surfaced. The company was buying rights to a patent for £20,000 (£7.5m, or $15m, in today's money) from the Baron de Martigny. But the patent was old and had nothing to do with battery buses. It was worthless and a scam. The investors sued for their money back. The company had to return £80,000. The investors would have been even less impressed if they had had any clue about the identity of the “Baron”. He was a Canadian music-hall artist living in theatrical digs in south London.

Martigny was only the front man. The mastermind behind this and a clutch of subsequent scams was Edward Lehwess, a German lawyer and serial con-artist with a taste for fast cars and expensive champagne. After this initial fiasco the London Electrobus Company struggled to raise money. But Lehwess had set up a network of front companies to siphon off the company's money. Chief among these was the Electric Vehicle Company of West Norwood, which built the buses. It was Lehwess's private piggy-bank. His personal secretary later said that Lehwess “used the company's banking accounts indiscriminately for his own purpose”.

The London Electrobus Company paid the Electric Vehicle Company more than £31,000 in advance for 50 buses. Only 20 were ever delivered. The buses were extortionately overpriced—each one cost about £300 more than a motor bus. On average Lehwess skimmed off £1 for every £3 that the company raised. It was a rate of attrition that crippled the company and it went into liquidation. Even then the scams continued. Lehwess bought eight buses for £800 from the liquidators, saying they were only fit for spares. He sold them to Brighton for £3,500—a mark-up of 340%—and they ran for another six years. That was a testament to the electrobus's reliability at a time when the life of a motor bus was measured in months.

Whether the fraud was truly a tipping point for electric vehicles is, of course, impossible to say. But it is a commonplace of innovation—from railway gauges to semiconductors to software—that the “best” technology is not always the most successful one. Once an industry standard has been established, it is hard to displace. If Lehwess and Martigny had not pulled their scam when they did, modern cities might be an awful lot cleaner than they actually are.