Revolv’s Mythbusters Series dives into common misconceptions around electric vehicles, offering factual insights to aid fleet owners and operators and help them get the most out of the EV transition.
The myth
Somewhere along the way in the EV transition, high costs have become synonymous with EV ownership – particularly for large fleets in states like California, which are facing oncoming mandates like Advanced Clean Fleets. In fact, more than 50 percent of fleet operators rank infrastructure investment and vehicle costs as significant obstacles to EV adoption.
As part one of Revolv’s EV Mythbusters series, we’ll highlight why this assumption is incorrect and how transitioning to electric vehicles can help fleets reach cost parity, and in some cases, find additional cost savings.
The fact
McKinsey predicts that within the next few years, the total cost of ownership (TCO) for many e-trucks will be similar to or better than that of traditional ICE trucks, due to several key reasons.
Let’s start with one of the biggest sticking points: fuel. Today’s price signifies a 25-cent jump from last month’s average, and since the start of 2024, the national average has increased 31 cents. On the other hand, electricity prices are much less volatile than oil prices, reflecting the many alternatives for production (ie: natural gas, coal, solar, wind) and price controls in many US states. At the same time, maintenance for ICE vehicles is also more expensive than EV counterparts, with EVs requiring 40% less maintenance, since they have fewer moving parts.
These costs are compounded by looming mandates like ACF, since fleets that wait until the end to electrify will incur exorbitant regulatory fines up to $10,000 per vehicle, per day.
However, not all EVs are cheap, and it comes down to finding the right applications. Fortunately, there are tools like the US Department of Energy’s Fleet Procurement Analysis Tool, which can evaluate a variety of procurement ownership structures, vehicle types and procurement scenarios, providing side-by-side analysis of cash flow – which makes it clear that costs vary by vehicle class.
Vehicle classes 2 & 3
Many fleets that rely solely on light-duty vehicles are seeing that they can achieve true TCO parity, without outside incentives. As McKinsey explains, on a TCO basis, light-duty vehicles are already “in the money,” and medium-duty trucks are expected to deliver TCO parity with ICE alternatives in the United States by 2025. This is also supported by the IPCC, which has found that shorter-range BEVs of 150 to 200 miles are projected to reach price parity this year and in the next two years, with the trend following for medium and heavy-duty vehicles in the coming years.
Vehicle classes 4 and above
However, many businesses require class 4, 5,6,7, or 8 vehicles right now, and when businesses are looking at $300,000+ per vehicle, the costs can seem overly burdensome. In these cases, tackling costs comes down to seeking out a combination of incentives.
Thankfully, there are a myriad of ways to save today – from federal funding from the Inflation Reduction Act, which assists with infrastructure costs; to local government programs like HVIP, EnergIIZE, and LCFS; to utility incentives like PG&E’s EV Fleet Program.
One key for businesses is to go all in. With infrastructure incentives, fleets often only get one shot; if they apply for 10 chargers, they will get incentives for 10, but if they apply for 100 from the get-go, then they will get 100. In the long run, the most cost-effective strategy for fleets is doing the biggest build possible from the beginning to slash the cost of development with incentives, and then drop in vehicles over time. As we’ve said before, it comes down to maximizing incentives today and taking advantage of cost savings for the EV tomorrow.
Additional points for consideration
A big piece of the puzzle that could put significant money back into businesses’ pockets is resale value. Since the EV era is in its early innings, there is no data yet for this, though we can expect more research on these costs with more EVs hitting the market alongside regulations forcing businesses to transition.
More than 50 percent plan to operate fully carbon-free fleets by 2027, and 90 percent plan to fully decarbonize eventually. The momentum is toward decarbonization, and looking ahead, EVs are inevitable for most businesses so it’s important to get a head start.