Total cost of ownership (TCO) for smarties

Total cost of ownership (TCO) for smarties – doesn’t this sound a bit more respectful than TCO for dummies?

You like trucks? We do too! And as we would like you to (eventually) spend your hard-earned money ONLY on consultants who can address topics a bit more elaborate than TCO, we kindly invite you to save on basic questions; seeing in this instance for yourself with the transparency of simple math and logic of pragmatic explanations, yet with very few limitations, how the 2 main drivers of cost of ownership when comparing traditional and battery electric trucks – battery cost and cost of energy – balance each other … or not!

So let’s ASSUME that you want to go battery electric in Regional or not-too-Long Haul (800 kWh battery to represent pretty much the current limits of the market), and that the trucks we are going to discuss are truly operational (maybe the biggest assumption!). You are a LTL carrier or at least are not scared to death by the specter or 2 or 3 additional tons, and believe you will have access to 600 kW chargers, not just the Level 1 1.2 kW charger that was sitting in your grand-grandma’s garage for her Columbia Victoria Mk XII.

a. You are a tech geek, and go for a Tesla Semi. You will just pay $100k more than for a traditional Class 8 tractor, courtesy of a lot of car-based volume effect, and Elon’s own magnanimity in pricing his trucks today as if they were already produced at 40k units a year.

b. You are a control freak, and / or only trust Volvo and Freightliner, so you are (mildly) happy to shell out $200k more than a traditional Class 8 tractor, due to inefficiencies, prototype-like volume, bean counter R&D surcharge recovery, not-so-fast young lady anticlimactic second mover (although possibly wise) syndrome, and greed.

Either way you will get a nice NMC battery good for 1,500 cycles = 6 years at 250 days each at 400 miles; granted, these specs suck a bit because while you might be able to use 95% of the battery capacity, at the end of the 6 years this capacity may be only 80% of the initial capacity, so at 2.05 kWh / mile you will necessarily stop after 295 miles to recharge for 12 minutes before being able to resume your journey. Snack anyone … or lunch if the charger is not readily available!

Cost-wise, in terms of maintenance with your BEV you will likely spend a bit more on your lower rolling resistance tires, but will more than recover this from fewer brake pads / drum shoes replacements due to regenerative braking; and will have said adios for good to SCR and DPF replacements. Anyway, with predictive / prescriptive maintenance, alternately your “clean” Diesel truck might already be itself at less than $0.10 / mile for maintenance over its first 600k miles, so to be extremely conservative, we will not take ANY credit for lower maintenance of a BEV vs. an ICEV.

How about residual value or more specifically, the loss compared to initiation value? After 6 years / 600k miles both trucks will be virtually worthless, so the penalty per mile will be approximately $100k / 600k plus 12% FET if Congress remains sleepy; this means $0.19 per mile for the Semi, and $0.37 for the dinosaurs. Please do not forget to reduce this by the corresponding benefit per mile resulting from the $40k tax credit that Uncle Joe is lavishly giving away to reduce inflation, plus the extravagant $120k HVIP from Governor Newsom if applicable.

Now in fact, the great differentiator is the cost of energy, based on where you refuel / recharge. And yes I heard the suggestion, crossing the state line may sometimes be a very sensible approach to go one step further.

Here, don’t err with the charlatans who would like you to believe that TCO is extremely complicated: it is in fact fairly simply, although very few do it right. Any decent Class 8 tractor with a decent load will give you 8 miles per gallon or better, ask Joel Morrow or North American Council for Freight Efficiency (NACFE) ; having the whole chain from tank to wheels operating on average around 38% efficiency. In comparison, any decent BEV with the same load will be around 85% efficiency from grid to wheels, that is including losses during charging (efficiency from battery to wheels is hence even better, but it is not the topic du jour); the 7% excess weight you may experience from the battery will increase the energy needs by 3% (at highway speed, drag may slightly pass rolling resistance), conversely behaving as if efficiency was reduced to 82.5%. The ratio of efficiencies will hence by 82.5 / 38 = 2.17 to the benefit of the BEV, giving the equivalent of 8 x 2.17 = 17.36 miles per gallon. Knowing that 1 DGE = 37.64 kWh, the BEV will require 2.17 kWh per mile from the grid (about 2.05 kWh from the battery itself).

If you are lucky enough to co-own your charger, your cost over and above the cost of electricity (depreciation, maintenance, etc.) will be about $0.04 per kWh. Based on current cost of Diesel and electricity in each state, the following table show the cost savings in terms of energy for a BEV compared to a ICEV based on 8 MPG for the ICEV vs. 2.17 kWh / mile for the BEV, and charger surcharge of $0.04 per kWh.

As can be seen in the table above, the only place in the whole world – as Americans would tend to see it as officialized by the MLB World Series term – where the cost linked to energy is higher for a BEV is Hawaii. Even before considering incentives, among the 50 states and the federal district, 44 already offer energy savings that more than offset the extra cost of the Semi; and Washington state would even admit the new dinosaurs, isn't this silly?

So here you are: if these trucks work as they are supposed to, and you and your operations are flexible enough to accommodate the specificities of a BEV, the Semi is an absolute steal and the big kahuna, except in Hawaii…

Don't we say that "no prophet is accepted in his own country"?