Ryder CEO: EV Tech Needs Inflection Point to Work in Commercial Transport

May 23, 2024

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For Ryder System CEO Robert Sanchez to place a bigger bet on EVs, there needs to be a catalyst that makes the technology more economically and operationally feasible for the commercial trucking industry. During his keynote address at this year’s ACT Expo in Las Vegas, Sanchez did not pull any punches on how he sees electric trucks fitting into his fleet.

“From our point of view, for commercial EVs to work in the real world, we need a breakthrough in battery technology and an expansion of the charging infrastructure. We need an inflection point that’s a credible technology breakthrough that serves as a catalyst for mass adoption of new technology,” said Sanchez, using the cell phone industry evolution from 1984 and the release of the Motorola DynaTAC 8000X as an example to substantiate his point of view. “It weighed two and a half pounds, offered 30 minutes of talk time on a single charge, and took 10 hours to reach a full battery capacity. In today’s money, a price tag of this break would be $12,000.”

Fast forward to today, and that technology has not only exponentially evolved, it has also changed the way the world works.

“Like the cell phone, we need electric vehicle costs to come down. We need smaller, lighter, and more powerful battery technology to improve the range and capacity. And like cellular networks, we need a nationwide infrastructure. We need the fastest applicable charges available where professional drivers can conveniently charge their trucks get a bite to eat and rest at the same time,” said Sanchez.

To gain a better understanding of the costs involved with transitioning to EVs, Ryder conducted a quantitative analysis comparing traditional diesel engines to EV technology. To determine the total cost of transport, or TCT, the Ryder team looked at the costs of diesel versus EVs in light, medium, and heavy-duty commercial classes. Based on representative loads from its own dedicated transportation business, the analysis showed significant cost increases to convert to EV technology in today’s market.

“The cost increases we expected; the magnitude of those increases we did not,” added Sanchez.

To determine the TCT of electrifying its fleet, Ryder calculated the cost of the vehicle, the fuel (whether diesel or electric), driver wages, and other factors that go into transporting the same load, the same distance, and achieving equivalent delivery times.

After crunching the numbers for some of their customers, Sanchez and his team began to realize that in many instances, the business case for converting to EVs isn’t there yet.

“If you take the average load that is currently being moved on a heavy-duty diesel tractor today and convert that tractor to electric, it requires nearly two vehicles and more than two drivers to deliver the same load at the same time as one diesel vehicle, more than doubling the TCT,” said Sanchez. “I think most of you would agree that this is a tough sell.”

From there the team conducted a comparison between diesel and electric light-duty vans, medium-duty trucks, and heavy-duty trucks, using cost assumptions for both California and Georgia. Since many of their customers have more than one vehicle but less than 50, they applied the individual costs to a mixed fleet of 25 vehicles.

Again, they added together the cost of vehicles, maintenance, fuel/electricity, necessary charging infrastructure, and driver wages, as well as general and administrative expenses. The last part of the equation was range and payload capabilities.

Starting with the van segment, the results showed that there was only a 3% and 5% cost increase in California and Georgia, respectively, due to the lower maintenance costs and decreasing fuel costs when using electricity versus diesel. But, again, this was only a one-to-one comparison, as adding together a mixed fleet of vehicles considerably increased the cost difference, according to the Ryder report. In the end, a mixed fleet of 25 vehicles in California would see an overall increase of 56%, while a Georgia fleet would see a 67% increase.

“If you extrapolate the mixed fleet analysis to the entire U.S. fleet of commercial vehicles for 100% transition to EVs and assume that businesses pass the increased total cost of transport on the consumers. We estimate that these increased costs would cumulatively add 0.5 to 1% to overall inflation,” explained Sanchez.

His next point of order, charging infrastructure, looked at the overall cost for installation and the cost to the grid in terms of increasing the available power to charge these vehicles.

“The Clean Fleet Coalition estimates in preparing today’s fleet for electrification would require an investment of nearly $1 trillion in charging infrastructure and power grid improvements,” said Sanchez. “By 2035, as more commercial EVs hit the road, the projected power needs for a large truck stop will be 20 megawatts, or equal to that of a small town in the U.S., and by 2045, the projected power needs for a large trucks will be 40 megawatts, approaching those of a major industrial plants.”

Overall, Sanchez explained, the purpose of the report, Charged Logistics: The cost of electric vehicle conversion, is to highlight the current gap in cost parity between diesels and EVs and help identify cost drivers so that OEMs, solution providers, and regulators can focus their development efforts to reach their zero-emission goals.

“We believe those to be advancing battery technology to address payload and range limitations, reducing vehicle costs, and building out sufficient charging networks and related power grids,” concluded Sanchez. “It has been our experience at Ryder that when new technology is ready for the market, people and businesses see the benefits and mass adoption follows. It’ll take all of us in this room and throughout the industry, working together, to strike a balance between encouraging innovation, safeguarding the interests of businesses and consumers and the environment alike. And I believe it is the key to a successful transition to a zero-emissions future.”