New Ryder analysis takes a close look at obstacles in converting to electric vehicles

Addressing some of the key factors, and challenges, in converting commercial diesel vehicles to electric vehicles (EV), Miami-based freight transportation and logistics services provider Ryder System Inc. this week issued a quantitative analysis on the potential economic impacts of the conversion to EVs.

The analysis, entitled “Charged Logistics: The Cost of Electric Vehicle Conversion for U.S. Commercial Fleets,” takes a deep dive into the myriad challenges related to converting to EVs, including what it called evolving state and federal legal requirements focused on transitioning to zero-emissions vehicles.

Ryder’s findings were based off of representative network loads and routes from the company’s dedicated fleet operations, which are comprised of more than 13,000 commercial vehicles and drivers. And it added that the analysis also looked at vehicle cost, maintenance, drivers, range, payload, and diesel fuel versus electricity and also accounted for EV charging time and equivalent delivery times.  

A key finding showed that the annual total cost to transport (TCT) by EV versus diesel is pegged to increase for all truck groups tracked by Ryder in its analysis, including: a 5% increase for a light-duty transit van to up to 94%-to-114% for a heavy-duty tractor (based on geographic region). And a mixed fleet made up of 25 light-, medium-, and heavy-duty vehicles pointed to a 56%-to-67% TCT increase for an all-electric fleet.

“While Ryder is actively deploying EVs and charging infrastructure where it makes sense for customers today, we are not seeing significant adoption of this technology,” says Robert Sanchez, chairman and CEO of Ryder, in a statement. “For many of our customers, the business case for converting to EV technology just isn’t there yet, given the limitations of the technology and lack of sufficient charging infrastructure. With regulations continuing to evolve, we wanted to better understand the potential impacts to businesses and consumers if companies were required to transition to EV in today’s market.”
With higher transportation costs stemming from EV adoption, Ryder explained that based on the cost impact to convert a mixed fleet from ICE (internal combustible engine) to EV, it estimates those increases would translate into a cumulative 0.5%-to-1% increase in overall inflation. This is especially notable when considering that based on data from the American Trucking Associations, around 72% of goods in the U.S. are transported via truck, with the increased costs passed on to consumers in the form of higher prices, based on the average cost impact to convert mixed fleets.

The analysis also cited various industry variables to factor in, regarding a conversion to EV, including:

• an increased focus on the development of commercial EVs over the last decade, describing the market as nascent and replete with challenges like infrastructure development, battery technology improvements, and cost considerations that continue to hinder adoption;
• EV Vehicle Availability, with 16.4 million Class 3-8 commercial vehicles operating in the U.S. but only 18,000 are currently deployed (based on a CALSTART report), with production estimates volatile in part to a changing regulatory landscape and EV availability and production may be “far less than the vehicles needed to run America’s supply chains,” should companies be required to convert to EV in the near future; and
• Charging Infrastructure, citing how a report from the Clean Freight Coalition, a concern comprised of truck transportation stakeholders, indicated that preparing today’s commercial vehicle fleet for electrification would require nearly $1 trillion in charging infrastructure and electric service upgrades

In an interview, Karen Jones, EVP and head of new product development for Ryder, told LM that the Class 8 comparison is where Ryder sees the most significant increases in TCT. 

“This is because the EV technology available in the market today has range and payload limitations that require twice the equipment and twice the labor, compared to a diesel tractor trailer hauling the same load the same distance with equivalent delivery times,” she explained. “A heavy-duty diesel tractor has a maximum payload of 29,000 pounds. We factor 1.2 drivers per vehicle, which is typical for a diesel unit in Ryder’s dedication transportation operations. Now, compare that to the max payload for an EV, which is only 22,000 pounds. Given the payload differences, accounting for EV charging time, and assuming equivalent delivery times, our analysis estimates a company would need 1.87 EV tractors and 2.07 drivers to equal the output of one diesel vehicle.”

As for what needs to happen for the adoption of EV technology to increase and for the TCT gap to close, Jones attributed it to a few different things.

One is that EV costs need to come down, which is tied to battery technology. And another one is that range and payload need to increase to be comparable to a diesel. Sufficient charging infrastructure is also needed, she added.

“It will take all stakeholders, including equipment manufacturers, technology innovators, transportation companies, and regulators, coming together to come up with new, innovative approaches and solutions,” said Jones.

When asked how long it may take for EV technology to fully mature and be more widely leveraged in the heavy-duty market, Jones said it is a tough call, as it depends on various factors.

“We need a breakthrough in battery technology, while keeping vehicle costs comparable to diesel,” she said. “The OEMs haven’t provided clear guidance on when vehicle pricing may come down. And, without cost parity, we can’t expect many businesses to adopt EVs, certainly not at the scale needed to achieve manufacturing efficiencies. And, of course, there’s the lack of charging infrastructure which will also require power grid updates. Those projects need to start a minimum of five years prior to commercial EV deployment at scale to avoid bottlenecks and further supply chain disruptions. I think, across the industry, the expectation is at least another five-to-10 years or even more.”

Please click here to read Ryder's “Charged Logistics: The Cost of Electric Vehicle Conversion for U.S. Commercial Fleets.”