Concerns over climate change and rising fuel costs mean transport decisions in the United States are moving towards fuel-efficient and eco-friendly vehicles. This is driving demand for electric (EV) and hybrid commercial vehicles, as well as those powered by alternative fuels, like natural gas.
The upcoming presidential election is expected to create uncertainty and impact investment decisions, particularly in the short-term. In addition, environmental targets and financial incentives on EV purchases could potentially shift in the coming years. This presents a strategic dilemma for businesses about to implement and invest in low emissions transport solutions.
Taking the time to research EV challenges - and weighing the pros and cons of different vehicle solutions - is key to making an informed decision to ensure the longevity and efficiency of an electric fleet.
Electric mobility challenges
Currently, fewer than two percent of new heavy trucks sold in the US are considered ‘non-polluting’, although this could increase to 25 percent of long-haul and 40 percent of medium-sized trucks by 2032, because of new regulations that are expected to limit the amount of pollution allowed from trucks from 2027. Alternative transport solutions include hybrids and hydrogen fuel cells, or finding ways to improve fuel efficiency on conventional trucks.
However, the upcoming presidential election could significantly affect current and future US environmental policy, with potential knock-on effects for the automative industry. Regardless, the outcome of the election will inevitably influence sales of electric trucks, while it will provide clarity to potential investors as well.
Grid and transportation infrastructure
Economic expansion and infrastructure projects contribute to growth in the US commercial vehicles market. Future investment in new road construction and expansion of existing infrastructure, for example, will sustain demand for commercial vehicles to transport materials, including both EVs and conventional ICE vehicles.
As we work towards becoming a more sustainable world, we need most new commercial vehicles to be powered by batteries or hydrogen fuel cells with reduced emissions. However, for this to happen, considerable improvements in grid and charging infrastructure are needed. Currently, the US power grid is not ready to support mass expansion of EVs and access to charging stations is inadequate.
Based on estimates by analysts at McKinsey & Company, annual demand for electricity to charge EVs on the road will surge from 11 billion kilowatt-hours (kWh) to 230 billion kWh in 2030, which represents approximately five percent of current total electricity demand in the US.
The Bipartisan Infrastructure Law, which passed in 2020, earmarked $7.5B for EV charging and fueling infrastructure to support a national network of chargers and refueling stations for hydrogen, propane, and natural gas. The program aims to install 500,000 public chargers by 2030, but there are currently not enough terminals to meet demand and estimates suggest the country will need 20 times more.
Charging costs are another significant issue. At public chargers, electricity can be five to ten times pricier compared to private chargers. For EVs to remain charged, public charging stations need to be economically feasible, fairly spread out, attractive to users, and connected to a strong power network. Moreover, they need to offer a profitable business model for the companies responsible for their installation and operation. By integrating these factors into planning, states and businesses could better address America's public charging needs.
The market for electric vehicles has witnessed considerable growth and this looks set to continue. As EVs manufacturing expands and charging infrastructure improves, companies will have more choice and reap greater benefits, sooner. Until then there are still major hurdles to adoption, including the high initial costs and a long wait to see returns on your investment. DLL offers unique finance options, allowing companies to manage their priorities and cash flow by replacing large upfront costs with a steady monthly payment. Equally, Pay-per-use is an affordable solution for end-users not looking for a long-term financial commitment.
Electric versus hydrogen powered trucks
As the US transitions to reduced-emissions commercial vehicles, there are two main options for fleet managers to consider: battery or hydrogen powered trucks.
Hydrogen trucks function in a similar way to internal combustion engines (ICE), but instead of using petrol or diesel, they are powered by compressed hydrogen fuel that generates electricity to power the electric motor and eliminates harmful tailpipe emissions. These trucks can achieve a range of up to 500 miles and refueling takes 20 minutes. While broadly more expensive than legacy ICE vehicles, refueling and performance characteristics are similar to diesel engines, which eases the transition.
Battery electric vehicles (BEVs) are more energy efficient than hydrogen trucks, have lower maintenance costs and more advanced charging infrastructure, but this technology delivers limited range and lengthy charging times, compared to hydrogen and diesel trucks.
There is a trade-off where high upfront costs are offset by long-term savings, plus leasing and Pay-per-use options, where monthly costs are directly driven by usage, can help spread the expense. The lower cost of electricity compared to diesel, along with fewer moving parts leading to reduced maintenance costs, means owners can benefit from substantial savings over the vehicle’s lifespan. As with the hydrogen ICE vehicles, limited charging infrastructure remains the key barrier here, as well as the downtime for vehicle charging.
Get started on your eMobility journey
Moving to an EV fleet requires careful thought and planning. Although time-consuming, it is important to understand the industry, particularly the pros and cons of different vehicles, and to investigate EV finance solutions before deciding. Seeking financial advice from experts in the field to support your eMobility goals will help establish your investment boundaries. DLL is here to support your journey and can help navigate the complex eMobility landscape. We offer a comprehensive service and flexible finance solutions, including inventory finance and Pay-per-use.
EVs are the future of transportation, and DLL is here to be your partner at every turn on this journey.
If you are looking to learn more, our eMobility team will be attending ACT Expo in Las Vegas on May 20, 2024. Please contact us if you would like to meet and discuss how DLL can support your company to transition to a more sustainable fleet with tailored financing solutions.
.jpeg?h=600&iar=0&w=1240&hash=5EC73B7AAC45E730D1879441C052B6ED)
