Quantitative analysis compares total cost to
transport goods by diesel versus electric vehicles and weighs
broader inflationary impact
Ryder System, Inc. (NYSE: R), a leader in supply chain,
dedicated transportation, and fleet management solutions, releases
a quantitative analysis of the potential economic impacts of
converting commercial diesel vehicles to electric vehicles (EV) in
today’s market. With evolving state and federal legal requirements
aimed at transitioning fleets to zero-emission vehicles, Ryder
customers frequently ask about the costs, benefits, and
complexities of converting to electric – as EV technology and
charging infrastructure are still developing. As a result, Ryder
published “Charged Logistics: The Cost of Electric Vehicle
Conversion for U.S. Commercial Fleets.”
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the full release here:
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Ryder releases a quantitative analysis of
the potential economic impacts of converting commercial diesel
vehicles to electric vehicles (EV) in today’s market. (Photo:
Business Wire)
Based on representative network loads and routes from Ryder’s
dedicated 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). And, 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,” says Robert
Sanchez, chairman and CEO of Ryder. “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.”
Methodology
Ryder examined the TCT for diesel engines versus electric
technology in the light-, medium-, and heavy-duty vehicle classes.
The analysis is based on representative network loads and routes
from Ryder’s dedicated fleet operations, which includes more than
13,000 commercial vehicles and professional drivers. It factors in
the cost of the vehicle, maintenance, drivers, range, payload, and
diesel fuel versus electricity, while also accounting for EV
charging time and equivalent delivery times. The analysis also
assumes the accessibility and use of the fastest applicable
commercial vehicle chargers – though this network infrastructure is
not yet built out.
First, Ryder conducted one-to-one comparisons for diesel and EV
transit vans, straight trucks, and heavy-duty tractors, using cost
assumptions from California, which typically has the highest fuel,
electricity, and labor costs in the country, and in Georgia, where
costs are generally lower.
Second, as most companies have more than one vehicle, Ryder
applied the individual costs to a fleet of 25 vehicles of mixed
classes and types, and compared the cost of owning and operating
that fleet in California and Georgia. The fleet mix is based on the
overall mix of commercial vehicles in the U.S., according to
third-party data (Polk Data Services), and includes 11 light-duty
vans, four medium-duty straight trucks, and 10 heavy-duty
tractors.
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.
- A light-duty EV transit van (Class 4) shows an estimated annual
increase in TCT of approximately 3% or nearly $5,000. While vehicle
cost increases 71% and labor increases 19%, partially due to more
time required for EV charging, fuel versus energy costs decrease
71% and maintenance cost decreases 22%.
- For a medium-duty EV straight truck (Class 6), the annual TCT
increases to approximately 22% or nearly $48,000. The vehicle cost
increases 216%, which is only partially offset by a 57% savings in
fuel versus energy and 22% savings on maintenance.
- And, for a heavy-duty EV tractor (Class 8), the annual TCT
increases by approximately 94% or approximately $315,000. The
equipment cost is the largest contributor, representing an increase
of approximately 500%, followed by general and administrative costs
that increase approximately 87%, and labor and other personnel
costs that increase 76% and 74%, respectively. Fuel versus energy
savings are approximately 52%. This assumes delivery times
equivalent to a diesel vehicle and factors payload and range
limitations as well as EV charging time – all of which requires
nearly two heavy-duty EV tractors (1.87) and more than two drivers
(2.07) to equal the output of one heavy-duty diesel tractor (which
requires 1.2 drivers on average).
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.
- A light-duty EV transit van (Class 4) shows an annual TCT
increase of approximately 5% or nearly $8,000. While the vehicle
and labor cost increases remain approximately the same, at 71% and
20%, respectively, fuel versus energy costs decrease 91% and
maintenance decreases 22%.
- For a medium-duty EV straight truck (Class 6), the annual TCT
increases to just under 28% or more than $53,000. The vehicle cost
increases 216%, which is only partially offset by a 60% savings in
fuel versus energy costs and 22% savings on maintenance.
- And, for a heavy-duty EV tractor (Class 8), the annual TCT
increases by nearly 114% or more than $330,000. Vehicle cost
remains the largest contributor, representing an increase of
approximately 500%, followed by other operating costs that increase
87%, and labor and other personnel costs that increase 79% and 76%,
respectively. Fuel versus energy savings are approximately 48%.
Again, this assumes delivery times equivalent to a diesel vehicle
and factors payload and range limitations as well as EV charging
time – all of which requires nearly two heavy-duty EV tractors
(1.87) and more than two drivers (2.07) to equal the output of one
heavy-duty diesel tractor (which requires 1.2 drivers on
average).
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:
- To convert a mixed fleet of vehicles in California to EV, the
TCT would increase nearly 56% or more than $3.4 million.
- To convert the same fleet in Georgia, the TCT would increase
approximately 67% or just more than $3.6 million.
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,” says Karen
Jones, EVP and head of new product development for Ryder. “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,” adds Sanchez. “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” here or go to ryder.com/evtct.
About Ryder’s EV Solutions
As one of the largest and longest-running fleet owners in North
America, with more than 90 years of experience in transportation,
Ryder manages a fleet of nearly 250,000 commercial vehicles. The
company has introduced EVs into its lease and rental fleets and
continues to work with multiple vehicle manufacturers to provide
new electric solutions to customers. Ryder also recently launched
RyderElectric+, which provides electrification advisors, vehicles,
charging, telematics, and maintenance to help facilitate the
seamless adoption of EVs.
About Ryder System, Inc.
Ryder System, Inc. (NYSE: R) is a fully integrated port-to-door
logistics and transportation company. It provides supply chain,
dedicated transportation, and fleet management solutions, including
warehousing and distribution, contract manufacturing and packaging,
e-commerce fulfillment, last-mile delivery, managed transportation,
professional drivers, freight brokerage, nearshoring solutions,
full-service leasing, maintenance, commercial truck rental, and
used vehicle sales to some of the world’s most-recognized brands.
Ryder provides services throughout the United States, Mexico, and
Canada. In addition, Ryder manages nearly 250,000 commercial
vehicles, services fleets at 760 maintenance locations, and
operates nearly 300 warehouses encompassing more than 100 million
square feet. Ryder is regularly recognized for its industry-leading
practices; technology-driven innovations; corporate responsibility;
environmental management; safety, health and security programs;
military veteran recruitment initiatives; and the hiring of a
diverse workforce. www.ryder.com
Note Regarding Forward-Looking Statements: Certain statements
and information included in this news release are “forward-looking
statements” within the meaning of the Federal Private Securities
Litigation Reform Act of 1995. These forward-looking statements,
including our expectations with respect costs of EVs and the
related costs of maintenance, charging infrastructure, labor and
insurance, as well as our expectations related to the impact of
converting diesel fleets to EVs on supply chains and inflation, are
based on our current plans and expectations and are subject to
risks, uncertainties and assumptions. Accordingly, these
forward-looking statements should be evaluated with consideration
given to the many risks and uncertainties that could cause actual
results and events to differ materially from those in the
forward-looking statements including those risks set forth in our
periodic filings with the Securities and Exchange Commission. New
risks emerge from time to time. It is not possible for management
to predict all such risk factors or to assess the impact of such
risks on our business. Accordingly, we undertake no obligation to
publicly update or revise any forward-looking statements, whether
as a result of new information, future events, or otherwise.
ryder-fms
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Anne Hendricks, amhendricks@ryder.com Amy Federman,
afederman@ryder.com
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