Electric trucks to hit price parity with diesel faster than expected, thanks to plunging battery costs

A new study has found electric trucks are on track to hit up-front cost price parity with their diesel category equivalents much faster than previously expected, thanks to rapidly falling battery costs.

The new report from Energy Innovation says that because heavy-duty vehicles (HDVs) require larger batteries, their purchase prices are much more sensitive to battery costs.

“For this reason, Bloomberg New Energy Finance’s (BNEF) recent outlook for HDV battery packs marks a pivotal shift, indicating battery electric HDV (BEHDVs) are expected to reach price parity with their diesel counterparts sooner than previously anticipated,” says the report.

To get a sense of the size of batteries needed, the Volvo FH Electric prime mover, the first which sold in Australia this week, has a 540 kWh battery pack and a range of 300 km.

In its price parity forecast last year, Energy Innovation predicted battery costs would be around $US123 per kWh by 2030. However, because of rapidly declining battery production raw material costs, they’ve now updated their forecast to $US85 per kWh, representing a 31 per cent reduction.

Energy Innovation says the reduced prices means price parity for some truck types has been brought forward.

“Results reveal that the updated forecast significantly advances the crossover threshold for when BEHDV prices are expected to fall below those of equivalent diesel trucks. A negative result, i.e., a difference in cost less than zero, means that a BEHDV is expected to cost less than the diesel equivalent.”

The research suggests that class 8 rigid trucks and short-hall tractor trucks (prime movers) could now hit price purchase parity with their diesel equivalents by 2030.

“Consider short-haul tractor trucks as an example of how the updated battery forecast affects vehicle costs. Businesses use short-haul tractor trucks—shown in Figure ES-3—for urban and regional freight delivery,” it says.

‘These vehicles typically return to a home base at night, enabling the convenience of overnight re-charging and avoiding the much larger capacity battery pack requirements of long-haul tractor trucks.”

Purchase price parity coming but electric trucks already much cheaper to run

While purchase price parity hasn’t been reached in some categories, the economics of electric trucking already destroys their diesel counterparts if you include fuel costs.

Like electric passenger vehicles, electric trucks come with significantly lower running costs than diesel-powered vehicles. According to Tesla, its fully electric semi-truck uses just 2kWh per mile (1.25 kWh per km) while fully loaded with 82,000 pounds (37 tonnes).

According to Tesla: “Charging with electricity is approximately 2.5 times cheaper per mile than refuelling with diesel. Operators can see estimated fuel savings of up to $US200,000 within their first three years of ownership.”

As renewable energy prices continue to decline, the cost per kilometre of electrified road transport will also continue to decline. With road freight impacting the supply chains of virtually all products, decreasing freight costs could have a profound impact on cost-of-living and the economy as a whole.