The Financial Cost of Switching to Electric Trucks

You have probably seen the latest and greatest news: diesel fuel is currently at $6.53 per gallon. That is an all-time high for the United States. As costs continue to increase and show little signs of slowing down, it may make financial sense to finally make the transition to electrical Class 8 vehicles. Here is some basic math to understand it.

Implications

Before calculating the potential return on investment, keep in mind that we will be calculating the increased cost per truck compared to the reduced cost per mile, and using that as our litmus test. There are numerous other factors that need to be considered:

• Electric trucks have a smaller but expanding network of refueling stations (favors diesel).
• Maintenance on electric trucks tends to be less common and cheaper, due to fewer moving parts (favors electric).
• Refueling takes longer for an electric truck, and can put a dent into revenue if not planned around appropriately (favors diesel).
• Fuel prices may go even higher (favors electric) or they may go down (favors diesel).

The Math

Our assumptions will compare a 2027 Freightliner eCascadia to its diesel counterpart, using our best estimates. While diesel fuel will run $6.53 per gallon per the citation above, electricity will run at 15 cents per kilowatt-hour.

Here are the stats for each:

2027 Freightliner eCascadia (Electric)

• Fuel efficiency: 2 kWh per mile (30 cents per mile).
• Purchase price: approximately $300,000.

2027 Freightliner Cascadia (Diesel)

• Fuel efficiency: .125 gallons per mile (81.625 cents per mile).
• Purchase price: approximately $164,000.

From these metrics we derive that we are paying $134,000 more to save 51.625 cents per mile. The raw breakeven point is 259,564 miles. Following the Federal Motor Carrier Safety Administration’s estimate of 60,000 miles per year, it will take a little over four years to break even. Assuming a vehicle lifespan of 18 years, it comes to a 22% return on investment.

But wait, what happens if diesel falls like a rock in price over the next year? If diesel becomes $4.25 per gallon, the entire operation changes. 53.125 cents per mile leads to a thinner cost saving margin, saving 23.125 cents per mile, 13,875 per year, 7.9% per year.

Conclusion

There is a lot of uncertainty when it comes to making the transition from diesel to electric, and for good reason. There are a thousand different variables that ultimately decide which one is a better decision financially (for this exercise, we did not even consider the lost revenue that an electric operator would lose having to wait an hour to refuel his or her truck every 280 miles!), so there is a case to be made to continue driving your current trucks and to tackle the problem again once you are in the market for a replacement.

Other Trucking Articles You May Like

• A Potential Diesel Export Ban’s Effect on Trucking
• FMCSA Issues HOS Declaration for Gasoline and Diesel Haulers
• TxDOT Project to Add 175 Parking Spaces
• CVSA Conducts Surprise Hazmat Inspection Blitz
• NHTSA Rolls Back Obama-Era Fuel Efficiency Standards
• FMCSA Tests Two Hours-of-Service Changes
• Freedom Haulers Act May Recruit Veterans to Truck Driving
• Port of Los Angeles Sees Second-Busiest July
• FMCSA Estimates Cost of English Language Proficiency Requirements
• States Challenge Department of Transportation Over Driver Records
• FMCSA Announces Another Five Removed ELDs
• Teamsters Sues California DMV Over Autonomous Trucking Rules

ABOUT TOPMARK FUNDING

TopMark Funding is a top-rated semi-truck financing and trailer financing company located in Roseville, CA. We specialize in commercial trucking and heavy equipment. Our mission is to become your long-term financial partner by helping you grow your trucking business and fleet.

We’re not here for the short term; we’re on the long haul with you!

We have financing options for trailers, semi-trucks, commercial trucks, and small businesses. We have great rates, low down payments, and flexible monthly payments regardless of credit history.

Learn more about Trailer Financing.

Fill out the contact form or give us a call at (866) 627-6644. One of our truck financing specialists will contact you as soon as possible to go over your truck lease needs and learn more about you and your business financing goals.