Electric trucks are the ‘inevitable future,’ fleets say

Source: By Jim Stinson, Utility Dive • Posted: Tuesday, May 26, 2020

Despite the pandemic environment, states and fleets push forward on electric tractors.

With 1.3 million electric vehicles on the road in 2020, and with lawmakers pushing for more adoption, fleets have been looking at Class 7 and Class 8 vehicles carefully — kicking the tires and doing the math.

But will the coronavirus crisis — and the resulting plunge in diesel prices — cause fleets to suspend their plans? Right now, some fleets are starved for freight business. Investment in electric trucks, with the uncertainty about their dependability and the maintenance involved, could pause if fleets have to juggle costs as the COVID-19 pandemic roils the markets in North America.

But according to Mark Russell, Nikola Motor president, electric trucks are still very attractive to fleets — in part because little has changed about the industry and related policies.

“Our target customers are typically very large and often global enterprises, and they need our battery-electric vehicles (BEVs) and our fuel-cell electric vehicles (FCEVs) … in order to meet their announced strategic environmental, social and governance commitments,” Russell said in an email to Transport Dive. “They have already made the decision to pivot away from fossil fuels, now and forever. Thus their plans to partner with Nikola are unaffected by temporary fluctuations in the price of diesel fuel.”

Work hasn’t slowed at Nikola because of the COVID-19 shutdowns, he said, noting the pandemic “has not impacted our long-term plans and progress.”

“[Fleets] have already made the decision to pivot away from fossil fuels, now and forever.”

Mark Russell

President, Nikola Motor

Nikola has not manufactured and sold a vehicle yet, something Nikola CEO Trevor Milton admits he hears from critics in a Thursday post on LinkedIn.

But the company has been growing. It announced a reverse merger with VectoIQ in March. The deal, valued at about $3.3 billion, made Nikola a publicly traded company while aiding it in its quest to supply fleets.

Nikola has 14,000 trucks on preorder, with the first delivery of battery-electric trucks to European fleets expected in 2021, a Nikola spokesperson told Transport Dive in March.

The company, which originally focused on hydrogen fuel-cell electric vehicles, did a test run of one of its trucks in November 2019, when it helped complete an all-electric delivery of a trailer full of Anheuser-Busch beer in St. Louis. The company is also producing battery-electric vehicles.

Nikola has 14,000 trucks on preorder but has not manufactured and sold a vehicle yet. Nikola

The leader in truck makers in the United States has also made clear it will go with electric power in the future, using BEVs. Roger Nielsen, president and CEO of Daimler Trucks North America, told attendees at the April 2019 ACT Expo in Long Beach, California, that the future of trucking was battery-electric tractors. Daimler Trucks would therefore bet it all on BEVs, even as competitors such as Hyundai and Nikola were at ACT Expo too, speaking of their investments in FCEVs, which use hydrogen as fuel to create electric power, creating water as emissions.​

Cost savings motivate fleets

There are other signs fleets have not shelved plans to buy BEVs and FCEVs.

First, fleets have made no major announcements about existing plans. Many firms have decades of strategy laid out. Toyota, which owns a majority share in truck maker Hino, has a plan to reduce its vehicle emissions by 90% by 2050.

Samsara, a fleet management and Internet of Things (IoT) company, released survey results Tuesday showing trucking industry leaders are still in agreement on the future of electric trucks. In the survey of 300 fleet managers, 90% said EVs were the “inevitable future of commercial fleets.”​

Another factor that has not disappeared: government pressure. Government mandates continue even during the COVID-19 crisis, with California accelerating its policies on Class 7 and Class 8 trucks in a surprise move in late April.

On April 28, the California Air Resources Board (CARB) updated its policy of the percentage of truck sales in the state. By 2024, the state wants 5% of Class 7 and Class 8 sold to be zero-emission vehicles (ZEVs). The previous mandate had been 3% of trucks sold in the Golden State. By 2030, that mandate will be 30%, up from a past goal of 15%, according to an analysis of the memo from the Union of Concerned Scientists.

Shefali Kapadia / Transport Dive, data from Samsara

The cost-savings are beginning to appear for fleets. In the past, the battery alone for a BEV was the main cost. But Ceres and the California Trucking Association, in a May 5 study, found battery cost “has declined as much as 80% over the last eight years. Further cost declines of over 50% are expected in the next decade, which should put upfront costs of many EVs below their conventional competitors by 2030.”

The Samsara survey found 85% of electric truck owners said traditional vehicles cost more than electric trucks to maintain. And 53% of managers said they will use savings to increase driver wages.

Greener pastures

Still, cheaper diesel has been a rare spot of relief for fleets during the crisis. West Texas Intermediate oil actually slipped below $0 briefly in April. The average diesel price per gallon was $2.386 on Monday, a substantial drop of 77.7 cents in a year.

Cheap diesel and more efficient engines have been the main competitor for electric trucks. Yet the environmental pitch for the electric vehicles remains strong, according to Patrick Gervais, VP of marketing for the Lion Electric, a Montreal-based company that sells electric trucks and buses to North American buyers.

Lion Electric has 300 electric school buses on the road now, Gervais told Transport Dive, with the first hitting the road in Massachusetts in 2016. Lion Electric produced its first Class 8 truck in March 2019, and Class 7 and Class 5 trucks will roll off the assembly line in 2021, he said.

Gervais said he sees no slowdown in momentum for electric as the lockdowns idle many greenhouse-gas-producing businesses and autos. People see the environment is cleaner, and it could stay that way even as freight movement returns to normal — if fleets use zero-emission vehicles, he said.

“It seems to us people are more aware of it now,” said Gervais. “People see the water is blue again.”

Lion Electric produced its first Class 8 truck in March 2019, and Class 7 and Class 5 trucks will roll off the assembly line in 2021. Lion Electric

Gervais said transportation makes up about 30% of annual greenhouse gas emissions, and electric trucks can cut that number with wider adoption.

Russell agrees fleets and consumers see the green benefits.

“We think the social distancing countermeasures employed around the world out of medical necessity have had a powerful secondary effect: demonstrating how much cleaner and sustainable our planet is when we burn significantly less polluting fossil fuel each day,” Russell said. “We are confident this vivid demonstration, obvious to everyone who is observing it, will only increase the … resolve of voters, politicians and policymakers worldwide.”