Financing New Vehicle Technology

by Patrick Gaskins & Frank Bussone May/June 2023
Patrick Gaskins and Frank Bussone from Corcentric Fleet Solutions explore financing battery electric and hydrogen fuel cell vehicles. Although the technology of fleets may be dramatically shifting, basic financing principles for these assets will largely remain the same.

Patrick Gaskins,
Corcentric Fleet Solutions

Frank Bussone,
VP, Technology and Data Analytics,
Corcentric Fleet Solutions

The transportation industry is in the midst of a significant technological shift with a variety of new powertrain options being vetted by fleets. Two of the most promising are battery electric and hydrogen fuel cell. As vehicles with these powertrains move into production, fleets will need to evaluate financing options.

The financing of these assets will be challenging since there is little concrete data on their performance and value over time. However, lenders should not shy away from this new technology. Basic financing principles still apply: focus on credit quality and asset quality.

Credit quality is straightforward. Determining asset quality with new technology will be more challenging, especially since there are so many new companies manufacturing alternative fuel vehicles in addition to the traditional manufacturers of diesel-powered trucks.

To date, most of the battery electric trucks on the road have been pre-production models that are being closely monitored by the manufacturers. There is not a lot of data on things like maintenance costs, energy costs and charging infrastructure costs. It is believed that because BEVs and hydrogen fuel cell trucks have fewer moving parts that maintenance costs will be lower. But at this point, there is no empirical data to support this claim.

In addition, these assets have not been in service long enough to evaluate asset lifecycles and replacement timing. A key data point when determining lifecycles is resale or residual values. Lenders will need to have a good sense of what an asset will be worth at replacement to properly assess risk and to determine which financing options they can offer.

Making a decision on an alternative fueled vehicle is about more than the vehicle itself. Fleets also have to look at charging infrastructure and charging costs. Fleets may need to have these items financed as well. Lending on factory upgrades and new systems is not foreign to banks so the evaluation of these programs will be more traditional.

Fortunately for lenders, electric vehicles are not totally uncharted ground. There has been an increased interest in electric passenger cars since the early 2000s and there is a great deal of data available. In fact, resale values of electric passenger cars are quite high.

Another data point lenders can turn to would be the financing of materials handling equipment. Lenders are familiar with the financing of batteries, battery charging stations and materials handling equipment and can use the experience in that market as background for financing battery electric trucks. While the data sets are not identical, they can give us an excellent starting point when evaluating financing options for new heavy truck technologies.

Operating data will be a key component in evaluating these new technologies. Municipalities have been purchasing electric buses in quantity and running them in a variety of conditions. Data on their maintenance costs, durability and total cost of operation is another excellent data set that more directly translates to the commercial vehicle sector. Another good place to gather data is from fleets that are deploying electric terminal tractors and using them in their yards and warehouse facilities. Some terminal tractors can see high usage rates and therefore will have significant use history to draw upon.

When it comes to electric and hydrogen fuel cell trucks, there simply is not enough in-use data to make lenders comfortable with taking a position of risk base on the asset quality. The truck makers themselves have not been completely forthcoming with what they are seeing in terms of vehicle performance including vehicle range on a single charge, charging times, maintenance needs and failure trends. Fleets themselves also need to be more open about their experience with battery electric and hydrogen fuel cell vehicles especially sharing performance data under various load conditions, various temperatures and in various terrains.

The more data OEMs and fleets can provide to potential lenders the more comfortable those lenders will be in making decisions on financing these new vehicles. Initially lenders are going to ask fleets to assume more risk than they typically do with diesel-powered vehicles. Fleets, in turn, are going to turn to OEMs to provide more end-to-end support of these vehicles perhaps via longer warranties and assuming some of the residual risk.

While it can be tempting for a lender to take a wait-and-see attitude when it comes to alternative fueled vehicles, the reality is that this will not be an option. Regulations are being promulgated not only in California but in other areas of the country setting zero-emissions goals for the commercial vehicle industry.

In addition, the issue of sustainability has now gained widespread acceptance in the general public. In their request for proposal, shippers
are now routinely asking carriers about their sustainability efforts and companies with private fleets are mandating fleet managers to find ways to reduce the carbon footprint of their vehicles without regard for the increased cost that will be incurred by moving to zero emissions.

In the face of asset quality uncertainty, lenders are going to be hyper focused on the credit quality of the company purchasing the alternate fueled vehicles. Companies need to make sure their balance sheets are in order when approaching lenders about financing new technology and when possible, should provide the lender with as much information about the asset and its performance as they can. While industry-wide standard data can be used as a basis for making a lending decision, the more specific information the fleet has about the assets it is preparing to purchase, the better.

The transition from internal combustion engines to vehicles powered by batteries and hydrogen fuel cells will take place over decades. We need to begin that transition today so we can gather real-world data on how these new technologies will perform in the day-to-day movement of goods. Total cost of operation is important to both the lender and the fleet.

Lenders are not in the business of taking on unnecessary risk and regardless of the regulatory and societal pressures to see more of these clean vehicles on the roads, lenders should not feel like they have to abandon common sense lending principals. However, they need to be prepared to work more closely with fleets and truck makers to understand the benefits and challenges of these new technologies and work to gather data that allows them to perform a TCO comparison between the new powertrain and the traditional diesel. Data sharing and transparency as well as open communication will be critical to get us to a cleaner transportation future.


Here are some key points for lenders and fleets to consider when discussing financing of new technology.

  • Use data from materials handling, terminal tractors and electric bus markets for background
  • Share data from early pilot projects with alternative fueled vehicles
  • Seek truck manufacturer input
  • Discuss risk sharing on residual values
  • Remember that the basics still matter •


Patrick Gaskins, senior vice president of Corcentric Fleet Solutions, oversees both sales and operations for Corcentric’s fleet offerings. Over the past 10 years, Gaskins has grown the fleet services area of Corcentric’s business by implementing a best-in-class asset management database and a data-driven approach to providing Corcentric clients with visibility into all areas of their fleet spend.

Frank Bussone, vice president of Technology and Data Analytics, Corcentric Fleet Solutions, has spent more than 25 years providing business analytics and business intelligence to the transportation and real estate industries. For the past 10 years, he has helped Corcentric customers find lower cost solutions for their truck fleets by working through the big data broadcasted from trucks.

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