The Tesla Model 3 is a significant litmus test of electric’s potential, and trucking is watching
The Tesla Model 3 at a price of $35,000 before incentives is one of the first electric vehicles (EVs) to compete in the passenger vehicle mass market, where the average price of a new car is $33,560 according to Kelley Blue Book. Prior to the announcement, Tesla’s base version of the Model S was the cheapest in the range, starting at $68,000. Analysts continue to argue that EVs are not ready to compete with internal combustion engines (ICE), and technology advances will need to come in the next decade or two before EVs can dominate the marketplace.
There remain a number of significant barriers for electric vehicles, and those barriers extend beyond just autos to the renewed push for electric trucks. But can anything stop the eventual rise of the EV?
Battery price point
A study published by Mckinsey & Company estimates the price of battery packs from 2010 to 2016 fell by roughly 80% from $1,000/Kwh to $227/Kwh. General Motors product chief Mark Reuss confirmed that the new Chevy Bolt cost only $145/Kwh. Tesla’s Gigafactory, Daimler, Toyota, and Mazda have all announced substantial investments in battery plants in anticipation of EVs, which will be significant not only in the ramp up of production, but also lowering the price of battery packs due to scale in the coming years. According to GM, the battery pack equates to 23% of the EV cost, so as prices continue to fall, a more competitively priced electric vehicle will emerge.
Range anxiety
One of the most commonly cited barriers to EV purchase is the range. Consumers have not shown a willingness to date to change their driving habits to either incorporate charging time or to accommodate range limitations. The range issue is magnified in trucking, given that the average truck driver will travel between 2,000 and 3,000 miles per week. The Tesla Model 3 carries a range of 215 miles. New EV entrants expect a 200 mile minimum range (such as the 2018 Nissan Leaf), which might satisfy a large segment of the passenger vehicle market where the average daily commute is 40 miles, according to the US Department of Transportation, but it’s not nearly far enough for the majority of the trucking market.
Researchers Venkat Viswanathan and Shashank Sripad from the Department of Mechanical Engineering, Carnegie Mellon University in Pittsburgh, estimate that a 600-mile range Tesla truck could carry only two-thirds of the average payload of cargo, highlighting the need for further technological improvements in battery capabilities before electric trucks are commercially viable. Fraunhofer scientists hope to increase battery range in EVs to 620 miles. Innovation will provide the key to longer range capabilities at a competitive price point.
Infrastructure
Another key point to address is public infrastructure. Tesla currently has over 5,000 supercharging stations (that offer 50% charge in 20 minutes) in the U.S., and has committed to double this figure in 2017 with 1,000 additional charging stations in California alone.
With trucking range not currently certain, comprehensive infrastructure, especially on highways, will be key. The White House announced that 48 national EV charging networks on 25,000 miles of highway in 35 U.S. states are to be established. Honda is testing dynamic charging on highways. Trucking’s demands for long range, though, means more technological breakthroughs of increased storage capacity and fast charging infrastructure are needed.
Operational costs
EVs have around 20 moving parts in comparison to ICEs’ over 2,000. Midwest Evolve is reporting a 50% reduction in maintenance costs in electric commercial fleets compared to other vehicle classes. While long distance trucking may seem years away, short-haul urban trucking is already here. BYD Motors is using electric trucks with onsite solar-powered charging stations in San Bernardino. Admittedly, the current costs of the electric trucks are significantly higher than their diesel counterparts because of the high battery costs, however, savings on maintenance and fuel is estimated to be $25,000 per year.
While EV passenger car sales saw a 36% increase in 2016 and are expected to surpass this figure in 2017, the EV share of the U.S. market remains at around 1.5%. The Tesla Model 3 signifies a market breakthrough in the technology and the range it offers at a price point that is competitive to the market and its success could be the indication of much the EV market will grow. Bloomberg estimates that EV sales will reach 25-30% of new vehicles sales by 2030, although some believe that is a conservative estimate.
Electric trucks are no doubt behind the passenger vehicle market right now due to range/charging limitations and weight ratios, however, the Model 3 of the trucking industry is on the horizon. The evidence suggests that the transition in the passenger vehicle market is happening because EVs are now becoming price competitive.
Trucking might not be far behind.