Declining battery prices are the single largest factor impacting the commercial viability of electric vehicles. From $1,000/kWh in 2010 to $210/kWh in 2017 declining battery prices have allowed automakers across a wide range of vehicle classes to offer market viable electric vehicles. Nowhere is this more true than in the emerging class 8 electric vehicle segment, where batteries will need to be as large as 1,000+ kWh to offer competitive driving ranges.
There are a number of factors that drive the upfront and total cost of ownership of a class 8 semi. Comparatively, electric trucks should have several advantages (excluding the battery cost) vs. diesel semis, as less parts will mean a lower upfront cost (excluding the battery) and lower maintenance costs. However, if the battery and fuel costs were isolated as the only upfront and ongoing cost difference it is easy to see how quickly electric trucks will become cost vs. their diesel competitors.
Taking todays economics, with pack level battery prices at ~$210/kWh and electricity vs. diesel energy savings of $0.27/mi a class 8 truck with a 500 mi range would need to have a useful life of 870,000 to break even vs. a diesel vehicle. With an average useful life of ~700,000 miles, today’s economics do not pencil. However, as battery prices continue to rapidly decline, price parity will quickly be reached for long range vehicles (and is arguable already here for short range vehicles). In fact, based on Bloomberg New Energy Finance projects, cost parity based on battery and energy costs alone, will be reached by 2019, just as Tesla is expected to begin producing it's long range class 8 semi truck [Figure 1].
Figure 1: Class 8 EV break even in lifetime miles vs. Li-ion battery price
This emerging cost advantage has the potential to completely reshape the class 8 trucking market.
Not only could this shift the way vehicles are purchased and who they are purchased from, there would also be a complementary shift in energy infrastructure to support these fleets. If you'd like to chat more about that shift, shoot me a note at firstname.lastname@example.org.