Fleets Pondering Truck Electrification Weigh Cost and Savings

October 15, 2018 by John O'Dell

Money is at both ends of the equation for fleet operators pondering a switch to electrified trucks.

A new study by delivery giant UPS and clean technologies promoter GreenBiz Group found that the upfront cost of acquiring electric trucks is the single biggest obstacle to ownership. Survey respondents also said that the savings those same trucks can bring to a fleet over their operating lifetime is the second biggest advantage.

The main driver for electrification, the study found, is the image boost and environmental benefits achieved by fielding zero- and near-zero emission trucks. Those benefits were the top reason for electrifying, according to 83 percent of the respondents.

Achieving corporate “green” goals is the prime motivation for most electric truck acquisition today, the UPS-GreenBiz study found.

Achieving corporate “green” goals is the prime motivation for most electric truck acquisition today, the UPS-GreenBiz study found. (Graph: UPS-GreenBiz)

The study, “Curve Ahead: The Future of Fleet Electrification,” was conducted earlier this year. It focused solely on attitudes toward acquisition of fully electric, battery-dependent light, medium and heavy-duty trucks. It’s findings reflect what electric vehicle proponents and critics have been saying for years.

“The reasons are consistent with what we see in our consumer surveys; the commercial market mirrors what we see going on in the passenger vehicle market,” said Arun Kumar, a director in the automotive practice at AlixPartners, a global consulting firm.

It will take a significant reduction in battery costs for electric trucks to gain wider acceptance, Kumar said.

AlixPartners’ own research sees costs falling from about $200 per kilowatt-hour of capacity today to a more market-friendly $100 per kWh by 2023, he told Trucks.com

Barriers to electric trucks include high purchase process and lack of charging infrastructure, according to the Curve Ahead study.

Barriers to electric trucks include high purchase process and lack of charging infrastructure, according to the Curve Ahead study. (Graph: UPS-GreenBiz)

The best strategies for determining the benefits of electric trucks, study participants said, are to lease in order to reduce up-front costs, and to start small, with just one or two vehicles and the infrastructure to support them.

But fleet operators also must look at specific uses. It makes more sense with today’s cost and infrastructure obstacles to electrify trucks that make short, intra-city loops and return to a central garage for overnight charging than to start with long-haul trucks that can be on the road for days on end, Kumar said.

GreenBiz asked its 3,801-member business advisory panel to participate in a web-based survey for the study: 206 responded. Additional information was culled from trade organizations such as the American Trucking Associations and North American Council for Freight Efficiency, and from in-depth interviews with 16 industry and public-sector executives responsible for acquiring commercial vehicles.

UPS, long a pioneer in adopting clean-emission technologies in its fleet of more than 100,000 vehicles, sponsored the study.

The challenges to electric truck adoption “can be daunting, but we’ve begun to see solutions emerge,” said Scott Phillippi, UPS senior director of automotive maintenance and engineering.

The study found that purchase costs for electric trucks need to fall – or incentives need to increase – to make them more attractive. Also, many businesses need assistance in obtaining and installing commercial EV charging facilities.

Lack of information about the value electric trucks can bring to a fleet also contributes to resistance to electrification, the study found.

While 64 percent of respondents cited lifetime cost of ownership savings as a plus, almost a quarter of said they have difficulty persuading top management that electric trucks are a worthwhile investment. Fourteen percent said they have difficulty even calculating total cost of ownership.

A third of respondents said there still isn’t enough electric truck availability or variety.

Increasing the number and types of electric trucks will go a long way toward moving the industry in a greener direction, said Chris Nordh, Ryder Systems’ senior director of advanced technologies.

Although not given as a reason for avoiding electric vehicles, 92 percent of the survey respondents also said their facilities were not well-equipped to handle EV charging for commercial vehicles.

That’s a signal to commercial builders, utility providers and local governments that more needs to be done to promote charger-ready developments and to make it easier for existing facilities to install the infrastructure necessary for high-capacity commercial truck charging.

“There is positive momentum from utility companies to focus more on commercial vehicle charging,” Kumar said. Trucks use chargers – and thus consume electricity – at a much higher rate than do passenger cars, he said.

The report’s findings are to be the topic of a panel at a GreenBiz conference in Oakland, Calif. on Oct. 16.

Read Next: California Plans $415 Million To Fund Clean Trucks, Freight Handling

One Response

  1. Charles Webb

    I think the electric vehicle gurus are overlooking a major problem with these vehicles. China has a virtual lock on the world’s supply of lithium, a vital component of these vehicle batteries. Do we want to just move from one evil to another? What will we do when China decides to raise the price of lithium into the stratosphere?

    Reply

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