Why electrification is the road less travelled for commercial truck fleets in North America

Accelerating the drive to transportation decarbonization is complex and costly for trucking firm

Long-haul container trucks are a long way from being able to plug into the electrification grid in North America | Rob Kruyt

Trucks, truckers and trucking companies are going to play a significant role in greening the supply chain in B.C. and elsewhere in North America. But how soon will they be ready, willing and able to embrace electrification and ditch diesel?

The current dispute over the Vancouver Fraser Port Authority’s Rolling Truck Age Program to eliminate older diesel trucks from servicing Port of Vancouver container terminals shows that a percentage of the local trucking industry is not close to being ready, willing or able.

However, in the wider world of North American freight movement the shift to decarbonization is accelerating. And that acceleration is needed. According to IDTechEx, a U.K.-based market research company, even though the world’s medium- and heavy-duty truck fleet represents less than 10 per cent of global vehicle traffic, it contributes 40 per cent of the global transportation sector’s greenhouse gas emissions.

Insights shared during a recent panel discussion on electrifying truck fleets in North America organized by FreightWaves, a global supply chain market intelligence company, focused on several overriding themes. 

For one, the 73 per cent spike in diesel fuel prices between May 2021 and May 2022 has increased interest in truck fleet electrification. But Jason Gies, vice-president of eMobility business at commercial truck and engine manufacturer Navistar, pointed out that converting diesel-powered truck fleets to electricity is a long-term process.

“Electrification isn’t just flip a switch, right. No pun intended.”

That is an understatement.

Consider this electrification reality check for Class 8 long-haul tractor-trailer trucks provided by BC Trucking Association CEO Dave Earle.

“These [electric] vehicles will not work in the long-haul world – full stop. They just won’t.”

Using the example of an electric Class 8 truck with a battery charge range of around 400 kilometres moving a load from Chilliwack to Kamloops, Earle estimated that, on a good day in good weather, it would probably get to the Coquihalla Highway’s toll plaza.

“And then you’ll have to recharge. And then we’re into energy transfer. These batteries are massive, absolutely massive. We’re talking four or five times the size of passenger vehicles.… So, we’re talking hours upon hours to recharge. It is just not going to work.”

But Earle pointed out that B.C. “unequivocally … is one of the leading jurisdictions pushing for [trucking industry electrification]” and added that the immediate market for electric trucks is in “return to base operations,” where trucks pick up and deliver freight locally and can be recharged overnight. That sector, he estimated, accounts for roughly 20 per cent of the province’s commercial trucking business. 

“So that’s no small market slice,” Earle said. “There’s a lot of opportunity to do this with battery electric vehicles. And that’s really where we see them being deployed.”

Marketplace economics require commercial trucking company fleet purchases to be based on total cost of ownership (TCO).

“They are not doing this [converting to electric trucks] to make themselves look good or feel good,” said Chris Nordh, vice-president of commercial development for electric vehicle maker Workhorse. “They are doing this because it makes financial sense.”

So, the high price of diesel and gasoline, he told the FreightWaves panel, “is a huge driver” in raising the profile and practicality of electrifying transport truck fleets. Nordh added that electrification has been seen as a “California thing” because of its government incentives for installing EV (electric vehicle) charging infrastructure and buying electric vehicles. 

“[But] the TCO equation makes sense today in most states.”

That equation, he said, is based on a combination of fuel prices rising rapidly and electricity prices remaining relatively constant. 

Nordh added that technological tools to increase charging infrastructure efficiency and integrate solar power and battery backup into that infrastructure can further optimize a company’s electrification investment.

“So, the TCO drives everything in the fleet world, and it is looking very, very good right now.”

Maintenance costs for an electric truck are also significantly lower than maintenance costs for a diesel transport truck.

Gies estimated that electric trucks have between 50 and 60 per cent fewer parts than their diesel counterparts. He said a truck fleet manager he talked with recently estimated that the first-year maintenance costs for electric versus diesel were around US$200 compared with US$2,500.

But the initial outlay for a Class 8 electric truck is significant: around $450,000 compared with $200,000 for its diesel counterpart. And that is if you can get one in B.C.

“Right now, if you have $10 million, I cannot get you a Class 8 battery electric truck,” said Earle. “They don’t exist.”

He added that operating costs for electric versus diesel trucks still weigh in favour of the latter. 

“Even with the incentives that exist, the comparison cost lines never cross over. You are never going to be able to run a battery electric vehicle as economically as you can a diesel – even at diesel prices today.”

However, Earle said that operating cost gap will narrow as battery and other electrification costs decline, “but it’s going to take time.”

The limited availability of large electric trucks, which haul freight containers from port terminals to other links in the Asia-Pacific supply chain, is one factor weighing against their widespread incorporation in B.C.’s fleet of 64,000 heavy-duty trucks.

The other is high-speed recharging infrastructure. Installing it is often seen as expensive and complicated. But Richard Mohr, vice-president of fleet solutions for EV network ChargePoint, downplayed that barrier to entry during the FreightWaves panel.

“I don’t think you’re seeing as much of a mountain as everyone thinks there is, because the vehicles coming over the next couple of years are going to come at a very reasonable rate; you’re going to have time to get these projects going.”

Gies added that having refuelling infrastructure on site “changes [a trucking company’s] operation significantly.”

Nordh agreed.

Replacing once or twice weekly off-site diesel or gasoline fuelling schedules with nightly onsite recharging provides a TCO savings that he said is often overlooked.

Nordh added that removing off-site diesel-refuelling requirements helps increase driver retention.

But Earle said there is a significant challenge in installing the infrastructure needed to charge tens of thousands of electric trucks that will be rolling into North American trucking fleets in the coming decade.

“The actual backside of the installation of it is how do you move that much power to that one location? Right? OK. It’s extraordinary.

“We’re starting to get a little worried that we’re going to hit walls where we’re going to have equipment, and we’re not going to have – never mind the cost – we’re not going to have electrons to do the work.”

Another key factor in fleet electrification integration success, according to the FreightWaves expert panel, is timing.

“Start early,” said Gies, “even if it’s only one or two [trucks]. It’ll save you money in the long run.”

But there is more than money to be saved on hardware; there is money to be saved on human resources.

Considering that in the United States, according to Thomas Wasson, FreightWaves’ enterprise trucking expert, it can cost anywhere between US$4,500 and US$6,000 to replace a long-haul truck driver, recruitment and retention are significant TCO considerations. That driver replacement cost can run up to $15,000 in Canada.  

Because electric trucks are quieter, vibrate less and are easier to drive than their diesel counterparts, electric trucks and electrification technology are proving to be important recruitment and retention factors.

“I had breakfast with one of our largest customers a few weeks ago,” Gies said, “and he was complaining to me that one of their biggest problems [is] the drivers don’t want to leave these [electric] trucks. They don’t want to go back into a diesel truck. And they’re complaining when they have to.”

He added that the barrier to entry for drivers is consequently far lower. That deepens the potential talent pool for trucking companies, which are facing a serious labour shortage. The American Trucking Associations pegged the truck driver shortfall at 80,000 in 2021.

In B.C., Earle said the industry is running at a 12 per cent job vacancy rate, which translates to around 6,000 drivers – this, even though long-haul truckers in Canada can earn upwards of $10,000 per month.

He added that the appeal to a younger generation of potential drivers of electrification technology, electric trucks and their low carbon footprint “cannot be overstated. It’s really important …  this is such a fabulous opportunity for our industry to bring new people into it.” •

trenshaw@biv.com

@timothyrenshaw