Lately, there has been a lot of activity in the electric and hydrogen-electric utility vehicle space. It seems almost every day there’s a new element about a truck maker and a tech company or battery maker making a deal to jointly develop electric vehicles (EVs). I think both sides have realized that by working together they will be able to bring trucks to market faster, taking advantage of the skills that each side brings to the table.
The Biden administration gave electric vehicles a boost by saying, “The federal government has a huge fleet of vehicles that we are going to replace with clean electric vehicles made here in America by American workers.” While the 645,000 vehicles in the federal fleet are not necessarily heavy-duty vehicles, getting more EVs of all vehicle classes on the market is a good thing.
Today, commercial electric vehicles are in their nascent stage of deployment. Some daring fleets have currently added a small number of electric vehicles to their operations in an attempt to gain real world experience. While this is a good thing, many of these vehicles are subsidized to help offset the initial purchase price of electric vehicles, which tends to be higher than that of an equivalent diesel truck.
As we all know, the business case for a commercial vehicle, regardless of engine, is based on a reasonable total cost of ownership (TCO) and, more importantly, a return on investment (ROI). The total cost of ownership is based on a variety of factors, including the asset’s initial purchase price, its energy performance, the cost of maintenance, and its residual value.
Residual value is where we run into issues with electric vehicles in commercial applications. There is no history on the value of these assets at the end of their first life. Besides, we don’t even know what the useful life of a commercial EV is.
As more and more electric vehicles – of all classes – come onto the market, we will be able to obtain data on their price in the used vehicle market. So I hope that states and automakers will continue to provide incentives for the purchase of commercial electric vehicles. However, I also hope that states take inspiration from the federal government’s manual when it comes to replacing state-owned assets. Perhaps instead of just offering incentives, these states should consider replacing their own fleets with electric vehicles. This will allow us to begin to establish a history of how these assets perform in the real world, determine their useful lives, and gain insight into what they will be worth on resale.
Even though the growth of EVs comes from the passenger car and light vehicle side, I think we can look at the value that these vehicles bring to the resale market and make some assumptions about the value of an average EV or heavy. when the first owner exchanges it.
If we are to achieve a zero emissions future, we must start deploying more alternative fuel vehicles. At the same time, if trucking is to make the transition to electric vehicles successfully, there has to be a good TCO and a good return on investment, even without incentives, because the incentives will not last forever.
I’m not naive enough to think that EVs are the answer to every cycle of use or application today, but the technology is evolving and improving at a pretty big pace. Like any new technology, it will take time to evolve; not everyone wants to make a cannon ball in the bottom of the pool. Some people prefer to dip their toes in the shallow end. However, if one considers other significant technological changes to trucks, one need only look to Automated Manual Transmissions (AMTs). Not so long ago, the participation rate for AMTs was 5%; today that number is closer to 95%.
The same is likely to happen with electric vehicles, and more fleets need to start testing the technology in their operation. In the meantime, we must look to the growing interest in electric vehicles from the passenger car and light truck side to begin to gain knowledge that we can apply to the electrification of trucking.