Ryder System, a company in supply chain, dedicated transportation and fleet management solutions, released a quantitative analysis of the potential economic impacts of converting commercial diesel vehicles to electric vehicles (EV) in today’s market in its report titled “Charged Logistics: The Cost of Electric Vehicle Conversion for U.S. Commercial Fleets.”
Based on representative network loads and routes from Ryder’s fleet operations in today’s market and other factors, the data shows the annual total cost to transport (TCT) by EV versus diesel is estimated to increase across the board — ranging from up to 5% for a light-duty transit van to as much as 114% for a heavy-duty tractor, depending on the geographic area. For a mixed fleet of 25 light-, medium- and heavy-duty vehicles, the analysis shows an increased TCT of up to 67% 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,” Robert Sanchez, chairman and CEO of Ryder, said. “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.”
TCT Impact in California: One-to-One Comparison
For California, one-to-one comparisons of various classes and types of commercial diesel vehicles versus their EV counterparts show the annual TCT for EVs increases across the board.
TCT Impact in Georgia: One-to-One Comparison
In Georgia, Ryder conducted the same one-to-one comparisons. However, the variance in TCT for a diesel vehicle versus an EV is greater. Operating EVs in Georgia results in a higher cost disadvantage than in California, because Georgia’s lower fuel and energy costs do not provide the same level of savings when transitioning from fuel to electricity.
TCT Impact in California and Georgia: Mixed Fleet
Ryder then applied the TCT for individual vehicles to a mixed fleet of 25 light-, medium- and heavy-duty commercial vehicles operating in California versus Georgia, including the assumption that a company would need nearly two heavy-duty EV tractors and more than two drivers to haul the same load on the same route as one heavy-duty diesel tractor.
In this scenario, a company converting 10 heavy-duty diesel tractors would need nearly 19 EVs and 21 drivers in order to provide the same level of service. This increases the total number of vehicles in the fleet from 25 to nearly 34 and drivers from 27 to nearly 36. Therefore:
Inflationary Impact
Ryder’s analysis also considers the potential inflationary impact if companies were required to convert to electric vehicles today. Based on the TCT for a mixed EV fleet, and assuming companies pass the increased TCT on to consumers, Ryder estimates those increases could cumulatively add 0.5% to 1% to overall inflation.
Key Takeaways
“There are specific applications where EV adoption makes sense today, but the use cases are still limited. Yet, we’re facing regulations aimed at accelerating broader EV adoption when the technology and infrastructure are still developing,” Karen Jones, executive vice president and head of new product development for Ryder, said. “Until the gap in TCT for heavier duty vehicles is narrowed or closed, we cannot expect many companies to make the transition; and, if required to convert in today’s market, we face more supply chain disruptions, transportation cost increases and additional inflationary pressure.”
“While mass adoption of EVs is not being required at this time, the purpose of this analysis was to quantify the gap in the total cost to transport goods with diesel versus electric vehicles and to understand what it will take to make commercial EVs economically viable at scale,” Sanchez said. “Today, it would require significant advancements in EV technology to improve range and payload, and according to at least one industry estimate, nearly $1 trillion in charging infrastructure and power grid upgrades. While EV technology is still evolving, we are evaluating multiple ways to reduce emissions, including electric, natural gas, hydrogen, hybrids and carbon capture, as well as continuing to advance diesel emissions technology. When a new technology is ready for the market, it has been our experience that businesses will see the benefits and broader adoption will follow.”
For a complete copy of the analysis and further insights from Ryder on the road to electrification, download a copy of “Charged Logistics: The Cost of Electric Vehicle Conversion for U.S. Commercial Fleets” online: https://www.ryder.com/en-us/evtct.
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