According to production notes for The Muppets:
“Dr. Teeth and the Electic Mayhem have been touring since 1975, and their school bus imploded somewhere in Montana last year, so they needed a new mode of transport that was consistent with their vibe. The classic VW Microbus, with cosmic paint job and groovy interior, was the logical choice." ”
In addition to a road-worthy van, second van was decorated and the undercarriage and floor were moved to allow the puppeteers and crew to work at the necessary heights. The band later was shown driving in a pre-taped segment for the 2016 Outside Lands Music and Arts Festival.
An early incarnation of the van appeared in the "Food Fight!" Muppisode as the Muppets' source of transportation. The van had a more generic look, though painted colorfully and marked with flowers and the words "PEACE" and "LOVE."