More Than Half of Fleets Prefer Lease Structure for Alternate Fuel Trucks
NOV 20, 2023 - 6:56 am
Fleet Advantage, a provider of specialty financing, fleet data analytics, fleet management services and life cycle cost management, released its fleet industry benchmark survey.
Continued Emphasis on Shorter Truck Life Cycles
The majority of respondents in the survey (59%) indicated they are operating their trucks for five years or less before replacement, which continues to support today’s greater focus on shortening asset life cycles, according to Fleet Advantage. This number was also 59% last year, up from 45% two years ago. The result also coincides with 40.7% of respondents listing improved fuel economy as the top motivating factor in securing new trucks, followed by lower maintenance and repair expenses (33.3%). Another 18.5% of respondents mentioned they are focused on right-sizing the number of trucks in their fleet to align with economic conditions. Furthermore, slightly more than a quarter of respondents (25.9%) said they feel today’s higher costs of fuel, maintenance and borrowing make long-term contracts less attractive.
Fleet respondents also noted they were reducing their life cycles, as more than half of respondents (51.9%) indicated they have the fewest number of trucks in their fleet are model years 2018 or older.
Alternate Fuel Truck Adoption Trends
Last February, Fleet Advantage conducted a survey asking what type of alternate fuel trucks fleets are most interested in. In that survey, 65% of respondents said they were most interested in electric trucks, while 15% cited hydrogen and 25% cited CNG. Forty-five percent of the respondents also noted that the time frame to deploy alternative fuel trucks would be five to 10 years.
In the current survey, those numbers are shifting, with 33.3% indicating EV over the next five to seven years (29.6% saying another 10 years), and 38.5% indicating hydrogen. This timetable for electric truck adoption continues to change, as just two years ago the majority (54%) said they didn’t plan to deploy electric trucks for five to 10 years. Also interesting is that the most recent survey shows that roughly 25% of fleets still do not see the value in adopting electric nor hydrogen trucks, respectively.
As more legislation is introduced to mandate the movement toward zero-emission vehicles, fleets are monitoring how these mandates may impact their near-term truck procurement plans. According to Fleet Advantage’s most recent survey, 59% of respondents are either expediting their procurement plans because of CARB pre-buy, or they are closely monitoring to see how it may alter their plans.
Organizations With Transportation Fleets Need Tools to Calculate Total Cost of Ownership
Calculating the total cost of ownership and visibility into overall ROI satisfaction continues to be a major challenge and a barrier to further alternate fuel adoption plans for many fleet executives, according to Fleet Advantage. Costs and ROI calculations on alternate fuel trucks are still concerning to nearly 90% of fleet executives. In fact, 44% of respondents said they do not currently have a proper way of fully calculating all costs involved with alternative fuel trucks, and another 44% said they are not yet satisfied there will be a decent ROI on these vehicles. Twenty-two percent cited unknown resale values, life expectancy, range and fueling infrastructure, weight and distance, and unproven technology as other barriers to adoption.
However, when asked what type of financing options would make the most sense for adopting alternate fuel trucks, 52% said they would prefer a lease finance structure.
A large reason why many fleets have different timelines in alternate fuel adoption is simply because all fleets have a unique adoption “bridge” to cross. To help provide confidence in their decision making, Fleet Advantage earlier this year introduced EVAN (Electric Vehicle Analytic Navigator). The tool compares diesel versus an electric Class 8 vehicle TCO, with modeling that evaluates fuel and mileage data versus kWh comparisons from the first year through a six-year life cycle.
“It continues to be clear that business agility, financial flexibility and a strategic eye toward future fuel options remain front and center for companies with transportation fleets and for-hire fleets,” Brian Antonellis, CTP, senior vice president of fleet operations for Fleet Advantage, said. “Over the years our industry benchmarking surveys have been a great tool to identify trends and microtrends that are important to our industry’s decision makers. This year is no different, as we’re seeing the bridge to alternate fuel technology continue to shrink, and now fleets are beginning to realize they need the right analytic tools to identify the adoption time that makes the most sense for their organizations.”
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