R - Trucking Electrification Throttled by Excessive Ownership Costs | Benzinga
(Photo - Jim Allen/FreightWaves)
Recent releases by Ryder System (NYSE: R) and Knight-Swift (NYSE: KNX) highlight the growing awareness of the added costs required for fleets that face increased pressure to transition to electric vehicles. A major challenge for long-haul trucking is cost, and current incentives from the Inflation Reduction Act only cover up to a maximum of $40,000 for commercial clean vehicles weighing over 14,000 pounds. A new Class 8 battery electric vehicle is significantly more expensive.
For Knight-Swift, the added cost puts the vehicles beyond profitability. The company said in a recent SEC filing, "There currently is an approximately $200,000-$300,000 new equipment cost differential between an internal combustion engine Class 8 tractor (a tractor weighing over 33,000 lbs., which comprise the majority of our fleet), and an EV alternative. Apply this cost over our fleet of approximately 27,500 tractors and the cost is beyond our ability to fund in an efficient manner." Knight-Swift highlighted the lack of range, noting, "Additionally, our two years of piloting the EVs currently available to our industry have shown a disappointing mileage range of approximately 165 miles compared with the Company's average length of haul of just under 500 miles."
The problem is not isolated to fleets but also to those who lease to them. Ryder System recently released an analysis that compared the total cost to transport (TCT) goods by diesel with that of battery electric vehicles. The results showed significant increases in total costs for heavy-duty EV tractors.
"And, for a heavy-duty EV tractor (Class 8), the annual TCT increases by approximately 94% or approximately $315,000" the report states. "The equipment cost is the largest contributor, representing an increase of approximately 500%, followed by general and administrative costs that increase approximately 87%, and labor and other personnel costs that increase 76% and 74%, respectively. Fuel versus energy savings are approximately 52%."
April CMV forecasts, trailer demand forecast revision, used Class 8 auction prices
ACT Research recently updated its commercial motor vehicle forecast, which saw significant revisions to trailers. The release notes that persistent Class 8 overcapacity continues to weigh ...