Latrobe Valley public bus users will be the first in Victoria to be transported in the state's first hybrid bus.
The vehicle, launched by Latrobe Valley Bus Lines at Moe on Thursday, will use 40 per cent less fuel that its conventional diesel counterparts.
Eight Volvo Euro 6 hybrids will be rolled out across the region in the next three years by the company and are expected to be more comfortable for commuters, with the first bus to hit the streets by the end of the month.
Latrobe Valley Bus Lines general manager Anna Tyben said while the vehicle cost 10 to 20 per cent more to purchase, savings would be recouped in fuel and running costs.
"It's quieter, it's smoother and it will run on battery technology up to approximately 25 kilometres [per hour] then it switches across to the combustion engine which is diesel," Ms Tyben said.
"We do a significant amount of idling time being a bus, idling at terminals and idling at stops, and that will all be run on electric technology which is fantastic.
"When it's idling to travelling on battery you don't know that it's running – you can't hear the engine. It's an amazing experience to be in or on electric technology."
The bus's battery will be charged by the engine, eliminating the need for an external power source or charging station.
Volvo president Hakan Agnevall, who visited the Latrobe Valley from Götenborg, Sweden, said the bus was the first of its kind in Australia and a step towards a sustainable public transport model.
"We have delivered 4000 hybrid buses all over the world so we have in Europe, London we have 1500 buses but also like in South America – Bogotá, Colombia – they're all over the place," Mr Agnevall said.
"Australia is moving very rapidly ahead so I think you're catching up in a good way."
Member for Eastern Victoria Harriet Shing and Latrobe City mayor Darryl White spoke in favour of the hybrid technology during the launch on Thursday.
Public Transport Victoria regional bus contracts director Stephen Ryan said the change would not mean additional costs for passengers.