Many local public transport authorities and operators are in need of replacing ageing bus fleet with cleaner and more sustainable vehicles in order to meet standards, increase efficiency and reduce transport related emissions. There is a wide choice of technologies for urban bus operators in the market including electric buses but at the same time new vehicles beyond lower emission Euro VI diesel buses are still a challenge for transport operators due to high acquisition costs and lack of charging infrastructure. The alternative proposed is to convert used diesel city bus into electric bus. Decision-making process for choosing technology of the bus conversion requires thorough assessment of possible solutions from the technical, operational, and economic point of view under the given conditions and constraints. Within the framework of this research, mathematical models are developed for assessing the efficiency of an electric vehicle on the basis of various criteria which affect life cycle costs. The models include the definition of functional dependencies and dynamic performance equations of a diesel bus and a converted electric bus. The results help to choose the most suitable parameters of the traction motor’s torque and power under the given conditions and determine the most suitable battery type and capacity for the selected bus route. Total Cost of Ownership model is utilized in the decision-making process to determine economic viability of a technological solution to convert a diesel bus into an electric bus. The proposed methodology is tested in the case study.