As the first batch of electric trucks roll off the factory lines this year from nearly every traditional truck OEM, and an array of startups and new market players, there is no question that the electric truck drumbeat will only increase in frequency and volume. Will the first 100 or so trucks in 2019 turn into 300 to 500 in 2020 or 2021? Will we reach thousands of units per year by the 2025 timeframe? In a heavy-duty truck market that can sell between 250,000 and 400,000 trucks a year, how and when can we think about getting to a 10 percent market penetration rate (nevertheless 20 or 30 percent, or more)? Like predicting the price of oil, these are the questions everyone wants answers to, however, few – if any – have clear crystal ball clarity to truly predict how quickly this market will develop.
The Promise of Electric Trucks
Should the technology be able to prove itself, electric trucks promise tremendous benefits to fleet operators and society in general. Quiet, tailpipe-less trucks, cruising our highways and moving stealthily through our neighborhoods offer the promise of clean air and reduced contributions to global climate change.
Simultaneously, operators have been promised lower total cost of ownership via reduced fuel costs and lower maintenance costs due to the reduced number of moving parts on an electric truck. Combined with the expectation that revenue will soar from increased demand from environmentally sustainable and market-share driven customers wanting to hire companies to collect and distribute society’s goods with sleek electric trucks, the vision of commercial fleet nirvana is potentially right around the corner.
However, for all of their promised benefits and appeal, commercial electric trucks have yet to truly prove themselves as operationally sufficient and economically superior. It is simply too early to tell if this promising young up-and-comer has what it takes to make it in the big leagues.
As an array of pilot programs and first-generation deployments take to the streets in 2019 and beyond, we will quickly begin to prove the ability for electric trucks to be not only environmentally sustainable, but more importantly, economically sustainable.
The bottom line is this: for the promise of electric trucks to become a widespread reality, they absolutely must offer commercial fleet operators a total cost of ownership similar or superior to that offered by today’s incumbent and increasingly sophisticated diesel platforms. This is no doubt an enviable challenge, especially as today’s diesels continue to raise the bar for all other fuels and technologies. Recent news from the electric-truck-heavy CES show in Las Vegas provides the confirmation to this point: the latest model diesel-powered Freightliner Cascadia – outfitted with all of the latest connected technology and fuel efficiency improvement “bells & whistles” – took home the “Best of CES” award for Best Transportation Technology.
Natural Gas Trucks: A Brief Historical Perspective
As we try to predict the future of electric trucks, we should consider the storyline of another recent up-and-comer: the natural gas truck. At the start of this past decade, the simultaneous run-up in the price of global oil to north of $100 per barrel and the advent of shale gas boom convinced investors, media editors, industry analysts, OEMs, fleet operators and a wide assortment of industry stakeholders that natural gas vehicles (NGVs) were the path to trucking’s salvation from diesel’s stranglehold. There was no question, it was going to happen.
NGVs promised operationally simplistic equipment, less maintenance given their passive after-treatment systems, and environmentally superior performance for costs less than running diesel rigs (sound familiar?). Research groups were projecting greater than 10 percent compound annual growth rates and 30 to 40 percent market penetration on the near-term horizon. Even the U.S. Energy Information Administration predicted in the agency’s 2013 Annual Energy Outlook that heavy-duty natural gas vehicles would grow “at an average annual growth rate of 14.6 percent” through 2040. Investment in the space began to climb, as was often highlighted by the likes of Jim “Mad Money” Cramer and other Wall Street coverage groups. In 2012, it was absolutely certain: natural gas trucks were the future.