R - Unraveling the Mystery of Electric Trucks' Residual Values | Benzinga
Rich Mohr, senior vice president of North America ChargePoint, said the past is a prelude for what is happening with first-generation electric trucks.
Depreciating electric trucks to scrap value
"Three years ago, the biggest risk around fleets adopting electric vehicles was the residual value and the [anticipated] life of those vehicles" Mohr told me. "Every single fleet [was] depreciating these things down to nothing because we have no clue what they're going to be worth."
Determining the residual value of electric vehicles takes several production cycles and contributes to slow adoption. (Photo: ChargePoint)
The same situation applied to electric cars until recently. Enough used EVs are showing up in Carvana towers, CarMax and dealer lots that establishing residuals is getting easier as shoppers are revealing what they're willing to pay.
A lot of early adopters of EVs got stuck financially when they wanted to trade in their cars. The same could happen with early adopters of Class 4-8 electric trucks. Class 1-3 trucks have some protection because of a larger secondary customer base.
"I expected the residual values of electric vehicles to fall dramatically in the first-, second- and third-generation production cycles" Mohr said. "The cost of that vehicle to produce in the first two generations is going to be the highest. Any commercial OEM that's producing an electric vehicle is still in that first generation of production or just entering into the second generation."
Meaningful residual setting for electric trucks 3 to 4 years out
Longer purchase cycles — typically four to seven years — for trucks suggests meaningful residual-setting market data on current purchases is three or four years out.
"Who knows right now?" Mohr said.
"If the vehicles really get the lifecycle that we expect them to, really get the maintenance costs we're anticipating and really get the [expected] lower fuel costs, there's no transportation manager that's going to say ‘I don't want the vehicle'."
But anecdotal evidence is mounting that costs associated with using electric trucks are higher than projected. The latest comes from Ryder System Inc. (NYSE: R) — Mohr's former employer — which looks at the costs of converting.
We'll take a closer look at that study next week in Truck Tech with Karen Jones, Ryder's executive vice president, chief marketing officer and head of new product development.