Planning for Electric Delivery Trucks

There are distinct business complexities to this exciting segment whose growth will clearly be driven by California’s proposed mandates

California is proposing a mandate on advanced clean trucks requiring 75% of class 4-7 sales to be zero emission by 2035.  These vehicles are good candidates for electrification, since their daily range is typically less than 100 miles, and the vehicles return to base and can be charged overnight.   The vehicles can be in service for many years and would benefit from the lower maintenance costs for electric, especially as vehicles age.

However, the downside of daily driving typically less than 100 miles, is the operating cost savings compared to diesel is likely to be less than $5000 / year.  For a three-year cost parity between electric and diesel, the additional investment in electric needs to be less than $15,000.   Not achieving an acceptable business case will make electric vehicles less attractive investments for fleets in the short term and could cause increases in the costs to deliver goods in the longer term, when mandates take full effect.

Oberon Insights has examined the cost roadmaps for electric delivery truck technology and the specific operational needs for these vehicles.   Our conclusion confirms this segment is good for electrification but there are key considerations which need to be addressed to ensure successful market growth of this segment.

Our key insights are as follows:

• 60-mile electric range would cover 50+% of the daily driving for Delivery trucks, but 100+mile range would be better suited to covering operational needs of fleets. 

• Based on California’s proposed mandate and sales in other States, sales of medium duty electric delivery trucks could reach 10.000 units/year by 2030. 

• Increasing annual production volumes are key to making electric delivery trucks affordable.   Based on our sales forecast and expected component costs reductions, electric delivery truck prices can be within 20% of diesel trucks by 2030.

• The stumbling point to achieving good paybacks on electric delivery trucks may be the required investment charging system infrastructure.  A 25kW charging station would allow vehicle to be fully recharged in 4-6 hours, but the purchase and installation costs are likely to be more than $20,000.   This means it could take at least 4 years to repay this investment through operating cost reductions.  There is an opportunity for an appropriate level of policy-driven subsidization of infrastructure to fill the cost/value gap in the near-term and could stimulate and sustain this segment for the long-term.  Managing the infrastructure costs and leveraging incentives will be key to ensuring adoption of the electric delivery trucks.

• Managing when the vehicles are charged is also of key importance with Time of Use electricity rates and potentially demand charges.   Developing the right strategy can prove to be more complex than may initially be expected by fleets.

• In developing the business case for electric delivery vehicles, there are two positive considerations:

  • The outlook is positive for a 10-year battery life capable of the 150k to 250k miles needed for delivery trucks, especially if vehicle have batteries providing a longer electric range than used on average.

  • Residual value of electric delivery trucks should be greater than diesel vehicles because diesel vehicles will be more expensive to maintain with time than electric.   This situation will be helped as confidence grows in battery life.

• Telematics can play an important role in planning electric vehicle deployment on routes as the vehicles age as well as providing a battery pack state of health, which will provide confidence on remaining life of the battery.

Our Report contains the complete analysis.