Kenworth and Peterbilt expect to sell a few hundred electric trucks in coming years. They will account for less than 1% of total revenue for parent PACCAR Inc. (NASDAQ: PCAR). But bundling charging units with the trucks improves the revenue picture dramatically.
“We like to make money in everything we do,” PACCAR CEO Preston Feight said on the company’s third-quarter earnings call Oct. 20. “And that’s our model for electric vehicles (EVs) as well as for anything else we do.”
PACCAR is taking orders for medium- and heavy-duty electric trucks for delivery in 2021. It is addressing the chicken-and-egg conundrum of what comes first — vehicles or a way to charge them. A lack of public charging stations for larger commercial vehicles threatens to stunt demand for the zero-emission vehicles.
PACCAR isn’t alone in tackling the issue up front. Other manufacturers have plans for making charging available. Numerous utilities and other businesses offer charging as a service (CaaS). Those plans include needs assessment, permitting and negotiated electric rates.
“I think the [truck manufacturers] are realizing they need to support their customer transition,” Bill Van Amburg, senior vice president of CalStart, told FreightWaves. “Bundling vehicle and infrastructure in one financing package is smart. And helps fleet customers de-risk the transition. Not all operators may want this. But I think it is a smart offering.”
Taking it on faith
PACCAR is collaborating with Faith Technologies and Schneider Electric to provide a charging infrastructure package for battery-electric Kenworth and Peterbilt trucks.
Schneider Electric builds chargers from low-power AC chargers to microgrid-enabled direct current (DC) fast chargers. The DC charges are capable of power sharing across multiple trucks.
Faith Technologies will handle the integration between Kenworth and Peterbilt trucks, charging hardware, and the network software. It will conduct site assessment, energy modeling and engineering by customer and maintain the charging equipment.
“One way to think about charging stations is they are going to be $150,000 or $200,000 to put in a charging infrastructure station for yourself,” Feight said. “So that is going to be something where people are having to spend money. Our financial companies are offering support for that.”
PACCAR will sell chargers through its parts operation and lend money for them through its finance arm.
“In terms of revenue, it’s probably not a huge new revenue source, but could lead to interesting side businesses around managing charging,” said Michael Ramsey, automotive and smart mobility analyst for Gartner Inc.
And don’t forget downstream revenue.
“The chargers will need replacement parts,” PACCAR President and Chief Financial Officer Harrie Shippers said on the analyst call.
What others are doing
Navistar International Corp. (NYSE: NAV) will offer a battery-powered medium-duty truck in 2021. Each sale comes with a blanket of services. Its approach to electrification is to manage all aspects from design to delivery through its NEXT eMobility Solutions. A dedicated engineering team in the Detroit area focuses on consulting, construction, charging and connecting.
Navistar also has an agreement with In-Charge Energy under which the Los Angeles-based company will provide consulting services and internal charging infrastructure to the manufacturer and its customers.
“With electric vehicles, it’s important to understand that we can provide the very best bus or truck for out customers. But if they don’t have a partner to show them how to operate it, charge it or take care of it in the long run, it likely won’t be a successful deployment,” said Jason Gies, Next director of business development.
Ramsey said such approaches reduce friction for electric truck customers.
“Based on what I see, fleet managers that want to move to electric don’t have a lot of information and are flying blind,” he said. “Selling the charger — one that you are sure will work with the truck — is a smart move.”
New financial products
Chinese truck maker BYD is working with CaaS startup Amply Power Inc. to offer full-service electric charging management with its trucks.
Electrify America is launching Electrify Commercial, a new business unit to deliver electric vehicle charging solutions to fleet owners and others seeking to manage their own charging network. Volkswagen Group of America established Electrify America in late 2016 as part of its efforts to make up for Volkswagen’s diesel emissions cheating scandal.
“We think there is a space here for entirely new financial products — bundling vehicles, infrastructure and fuel — that will be emerging,” Van Amburg said.
That is the business model startup Nikola Corp. (NASDAQ: NKLA) is pursuing for hydrogen-powered fuel cell electric trucks. Nikola battery-electric truck purchasers, however, are on their own to secure electricity. Many purchasers will choose behind-the-fence infrastructure for trucks that return to base for nighttime charging.
Current charging deficiencies
For the dozens of electric heavy- and medium-duty trucks in demonstration and test fleets, charging availability is an issue.
When Daimler Trucks North America (DTNA) was moving its Portland, Oregon-built eCascadia fleet to Southern California, it found few places to charge. It used chargers intended for light vehicles, hogging space for the hourslong replenishing the Class 8 tractors required.
“There is not a real network for charging for heavy-duty trucks,” said Michael Scheib, DTNA eMobility Platform director.
A steep learning curve
In Chino, California, where NFI Industries operates 10 eCascadias out of its 15 million-square-foot warehouse campus, the learning curve for electric infrastructure is steep.
”We’re used to negotiating with diesel suppliers, the big truck stops,” Bill Bliem, NFI senior vice president of Fleet Services, told FreightWaves in February. “Now, we’re having to negotiate with SoCal Edison.”
Participants in the Volvo Trucks North America (VTNA) Low Impact Green Heavy Duty Transport Solutions project (Volvo LIGHTS) have had their own issues.
“It’s been many months of going back and forth between the partners on the project to make sure that everything is organized,” Troy Musgrave, director of process improvement at Dependable Highway Express, told Fleet Owner. Dependable and NFI are testing Volvo VNR Electric trucks.
“It’s very complicated to meet all the regulatory requirements and guidelines, too, because you have so many different partners involved, and everybody needs their criteria met.”