The New Zealand Green Investment Fund (NZGIF) is contributing $20 million to UK fleet and battery storage specialist Zenobē for the production of 18 electric buses.
The buses are being supplied to local operator Go Bus Transport Limited for its Christchurch fleet following an announcement in April.
But Global Bus Ventures chief executive Tim Duncan said government funding for imported product was perplexing.
"We're really pushing to build local and we like supporting the local industry," Duncan said.
"There's a huge economic and environmental benefit for building local and it is disappointing to see imported product that is substantially heavier."
Duncan said he believed the company's buses were about two to three tonnes lighter and therefore did not require a heavy vehicle permit.
The Rolleston firm is the country's only manufacturer building buses from scratch, including the country's first zero-emission hydrogen bus.
National Party Selwyn MP Nicola Grigg hit out at the move to outsource production offshore, saying Global Bus Ventures had been neglected.
"I think there is a moral obligation here and I think most New Zealanders would agree that if we're going to be spending tens of millions of dollars on low-emission buses then we should be spending it on New Zealand-based companies," she said.
Questions remained about the long-term costs for producing buses offshore, Grigg said.
Canterbury Regional Council said operators were required to determine whether new vehicles met quality standards.
"[They] are required to provide us with assurance that this is the case," a council spokesperson said.
"As part of this, we review the specifications of new types of vehicles to the overall fleet."
The Bus and Coaches Association believed production for low-emission buses going offshore made sense.
Chief executive Ben McFadgen said Go Bus leasing their assets to Zenobē minimised risk.
"Something like this arrangement enables operators to invest in electric vehicle assets without having to invest huge amounts of money," McFadgen said.
"We're still at the beginning of this technology and there's still a long way to go around its development."
A balanced approach was required and local manufacturers still need to be considered, he said.
The NZGIF is a green investment bank established by the government to "facilitate and accelerate investment that can help to reduce greenhouse gas emissions in New Zealand".
The fund's major shareholders are Climate Change Minister James Shaw and Finance Minister Grant Robertson.
NZGIF chief executive Craig Weise said the arrangement with Zenobē reduced one of the "main barriers to transition and upfront costs".
"NZGIF makes investments that help reduce New Zealand's carbon emissions, as this is our mission," Weise said.
"The decision around service solution providers is a commercial one for counterparties, in this case, Go Bus, who selected Zenobē as operating partner through its own processes.
"It is not appropriate for NZGIF to comment on the commercial arrangement between Go Bus and Zenobē."
