Commercial vehicles - road to zero emissions: part 2

Ok, we don't have flying cars yet, and that's ok. We do have some pretty impressive technology in the works that will help get us closer to the zero-emissions future we all dream about. One of the essential pieces of the puzzle is electric vehicles, particularly electric trucks in the transportation industry.

The trucking industry is responsible for massive energy consumption and carbon emissions. In the United States, heavy-duty trucks account for around 20% of transportation-related fuel use and emissions. If we can make a dent in those numbers, it will significantly impact the environment for generations to come.

Electric trucks are poised to make that dent. Companies like Tesla, Daimler, Freightliner, Volvo, Lion, Peterbilt, Kenworth, and Nikola are just a few manufacturers leading the charge with some pretty unique offerings. Improvements in technology, rising fuel costs, and government incentives will accelerate the transition to electric trucks. The math shows that electric trucks can be a wise investment, and we're beginning to see more and more companies make the switch. It's an exciting time for the industry, and we can't wait to see what the future holds.

Let's look at a day in the life of a truck operator of a class 8 truck. For the sake of this comparison and to prevent the math from getting too crazy, we will look at what the FMCSA defines as long haul(+450 miles) and short-haul (<450 miles) routes. Conventional diesel trucks face challenges, including carbon emissions and rising fuel costs. Electric class 8 trucks face a few unique challenges that traditional diesel trucks do not: range, charging time, and lack of infrastructure.

According to the United States Department of Energy, the average class 8 truck uses 11,818 gallons of fuel per year, averages 5.29 MPG, and drives 62,751 miles per year. With the average price of diesel at $5.54, that's over a dollar per mile and $65,000 per year in fuel costs alone. As fuel costs rise, adoption of electric semis will continue, but there are still costs to charging the battery packs.

The direct electricity cost to charge an electric semi at a public charging station is unknown and depends on many variables. Rest assured, unlike charging your iPhone at your local Starbucks, it will cost money to charge vehicles. Ideally, trucks would charge at their own depot, which would have them paying whatever their kWh is. Currently, the national average is $.14 per kWh.

As infrastructure develops, different pricing models such as charging by the hour and fluctuating prices based on peak times will play a significant role in the electricity costs of charging your trucks. To fully recharge the Tesla 500-mile range battery using $.14 per kWh would cost around $70. It would cost nearly $9,000** per year to charge, assuming the semi travels the national average of miles each year.

Electric trucks will require an infrastructure investment to support them, unlike diesel trucks. Infrastructure improvements will require networks of charging stations and the necessary wiring and equipment to help support electric vehicles. It will take time to build the infrastructure to achieve full EV readiness.

Electrifying a fleet will also require infrastructure requirements for owners/operators. The cost of this infrastructure will vary depending on the size and scope of the fleet. A minor operation may only need a few charging stations, while a larger one will need many more.

According to McKinsey & Company, Chargers range from $2,500 to more than $40,000 depending on charging speed and capabilities. While this is a hard pill to swallow, this isn't per truck. So even at the highest end, if a fleet owner can charge several trucks at different times, this number is quickly amortized.

The theory is the cost of operating an electric truck is significantly lower than a diesel truck. In addition to fuel costs, there are other costs associated with running a diesel truck that doesn't apply to electric trucks. For example, electric trucks don't need oil changes, and the brakes last much longer.

According to a National Renewable Energy Laboratory (NREL) study, electric trucks have far lower operating costs than their diesel counterparts. The NREL estimates a per-mile operating of .06-.143 for a class 8 BEV resulting in annual operating and maintenance costs between $3,765.06 - $8,973.39. Data on Class 8 diesel tractors shows a per-mile cost of $0.12–$0.19, resulting in an annual operating cost between $7,530 - $11,922.

You would think this would be the easiest comparison, but many electric truck manufacturers haven't released the prices for their class 8 electric trucks. The base price for the Tesla Semi is $150,000(300 miles) and $180,000(500 miles), but these prices are the "expected price." Some estimates have these vehicles coming in at 2 to 4 times as expensive as a typical diesel truck ($140K - $150K) which puts us in the $290K - $580K per truck!

Now that we've looked at all the individual pieces let's put them together and see what we get. The infographic below shows the total cost of ownership (TCO) for an electric truck versus a diesel truck over a period of five years.

As you can see, the upfront costs for an electric truck are significantly higher than a diesel truck when you factor in the vehicle plus estimated infrastructure costs* ($100K).

The higher (unknown and estimated) upfront costs of other electric semis take longer to reach this mark. However, the total cost of ownership evens out over time and eventually, the electric option has a lower TCO. The Tesla semi becomes cheaper to operate around year three due to lower operating and maintenance costs.

This is a big deal, and there are some unknowns, but electric is almost always cheaper than diesel when it comes to the cost of ownership over a truck's life. While the upfront cost of an electric truck is higher, the savings on fuel and maintenance will quickly make up for it. One theory supporting this is electric motors have fewer moving parts than a typical internal combustion engine(ICE), so there aren't as many things to break, maintain, and repair.

Another game-changer is financial incentives from the government and state programs. These can help offset the cost of an electric truck and make the total cost of ownership more attractive. California, for instance, is offering $120,000 financial incentives for many class 8 electric trucks. There are even more incentives available depending on state and truck usage. At this time the Tesla semi is not eligible for the California rebate.

While the adoption of electric semis seems to have strong potential, many unknown factors exist. The three biggest questions facing electric trucking today are range, charging time, and infrastructure needs; there are many more to ask and answer.

• How will the industry manage the increased demand for electricity?
• Can power grids handle the additional need for electricity, and how will they need to adapt?
• What is the lifetime of the battery?

  • How will weather and usage impact battery performance?
• What do drivers do while waiting for their trucks to charge?
• Incentives for purchasing electric trucks?
• How high will diesel prices go?
• Supply constraints on raw materials?
• How will improvements in technology shape this transition?

  • Green Hydrogen
  • Solid-State batteries
  • Battery swaps
  • Inductive charging systems

Electric trucks are coming, and they're coming fast. A lot is still unknown, but we know that electric trucks can offer a cheaper total cost of ownership than their diesel counterparts. With government and state incentives, the upfront cost of these vehicles is becoming more and more attractive. The time to start thinking about electric trucks is now.

For fleet owners, the decision to switch to electric trucks is a financial one that they can feel good about because of the positive impact on the environment. There is a lot to consider, and LeasePlan has the expertise and experience to help your fleet transition to electric.