For Mack Trucks, the 18-wheeled big rig future is still going to be EV

Founded in 1900 in Brooklyn, New York, Mack Trucks is known for its 18-wheel, diesel-powered large trucks with the iconic bulldog on the hood. For 2021, the iconic ornament debuts in copper instead of the usual gold, marking the historic manufacturer’s first foray into electric vehicles. The LR Electric is a heavy-duty garbage truck designed to pick up and dispose of all types of trash without emitting any toxic greenhouse gases.

Mack has since delivered about 35 LRes to a growing number of cities, from New York City to Miami, Florida, with adoption rates described by Mack Trucks North America president Jonathan Randall as slow but steady.

“Cities are not taking delivery en masse but testing the technology to see how it works,” he said.

Mack, now based in Greensboro, N.C., is part of Sweden’s Volvo Group and its Volvo Trucks division, which makes its own brand of electric vehicles for the U.S. and overseas markets. Volvo Group’s 2023 financial report shows that Mack received 124 new orders for pure electric vehicles last year, an increase of 200% from 44 in 2022.

There’s no doubt that electric vehicles are possible, and not just Mack’s, including the midsize model MD Electric launched last March. Nearly every automaker, big or small, makes all-electric models, plug-in hybrids, and gasoline-electric hybrids. Many OEMs have set targets to sell only zero-emission vehicles (ZEVs) by 2050, in line with the broad net-zero emissions targets of the 2015 Paris climate agreement to combat global climate change. According to the latest statistics from the U.S. Environmental Protection Agency, the transportation industry is the largest source of greenhouse gas emissions in the United States, accounting for 29% of total U.S. emissions in 2021.

Billion-dollar questions about buying electric cars

Beyond the feasibility of the technology, however, the multibillion-dollar question is whether and when customers will buy electric vehicles as the industry transitions away from internal combustion engines. Purchasing decisions in the consumer and commercial markets are different, and the differences are reflected in last year’s electric vehicle sales results and future growth prospects for both industries.

According to data from Kelley Blue Book, although U.S. consumers purchased or leased a record 1.2 million electric vehicles in 2023, an annual increase of 46% and increased the total market share of electric vehicles to 7.6% from 5.9% in 2022. Growth has slowed. Electric vehicle sales increased 40% year-on-year in the fourth quarter, but this was lower than the 49% increase in the third quarter. Cox expects electric vehicle sales this year to reach 1.5 million, an increase of about 36% from last year. In other words, the U.S. electric vehicle market is still growing, just not as fast.

Automakers from Ford to Tesla to General Motors have been lowering electric vehicle prices to spur demand, slashing production targets for new electric models and shifting work back to conventional-engined models, and are adding to the confusion they originally designed for electric vehicles. The aggressive timetable set appears even more uncertain. Transition to electric vehicles while talking more about hybrid vehicles.

EDF observed big increase Deployment of electric trucks between 2020 and 2023. In 2020, 80 electric truck deployments were cataloged, and by 2022, the number of these deployments jumped to 1,948. Combined with more than 10,000 deployments in 2023, the list tracks 12,894 medium- and heavy-duty electric trucks entering service across the U.S. over the past four years. This growth does include Class 2 electric vehicles, such as the electric vans that Amazon and other delivery services are increasingly using.

Sales of all medium- and heavy-duty trucks, which account for only about 5% of vehicles on the road, will total 507,277 units in 2023, up 7.6% from 2022, according to the National Truck Dealers Association. The association does not release electric vehicle sales numbers.

“When you talk about business-to-business versus business-to-consumer (market) and the adoption of this technology, it’s a different dynamic,” Randall said. “I know that B2C has taken a step back from a demand perspective. We really haven’t seen interest waning. Of course, we’re not producing as many electric vehicles as the automakers are, but for us, interest is still pretty strong,” he said. And it just builds.”

Trucking industry analyst firm ACT Research echoes Randall’s optimism, albeit tempered. In September, the company released a study predicting that adoption of zero-emission and decarbonized vehicles will reach 25% by 2030 and 50% by 2040. However, the study predicts that adoption will be relatively low from this year to 2026, “reflecting the fact that BEV sales for commercial vehicles are still in the early stages,” said Ann Rundle, vice president of electrification and autonomous driving. That will start to change in 2027, she said, in part because of upcoming changes in federal and state emissions regulations that could cause the price of diesel trucks to rise.

Randall also echoed Randall’s distinction between buyers. While the current fallback in consumer demand for EVs is largely attributed to still-high sticker prices compared to internal combustion engine vehicles and charging anxiety (anxiety about range and charging stations), commercial buyers calculate the total cost of ownership (TCO) . “That’s one of the biggest criteria,” Rundle said. “This is a business asset. What’s my return on investment?”

The upfront cost of electric trucks is still relatively higher than that of ICE models, so corporate fleet owners, private haulers and individual truck operators must weigh how quickly the lower operating costs of electric vehicles will pay off.

“You can significantly reduce aftermarket demand because there are fewer moving parts in an electric vehicle,” said Mattias Holmberg, an analyst at DNB Markets in Sweden. “While electric vehicles still have routine maintenance costs, such as brakes and tires, they won’t As high as repairing or replacing pistons, valves and other expensive components that make up internal combustion engines as well as multi-speed transmissions, this will help narrow down the cost range.

But so far, he said, when car owners consider TCO (including after-sales spare parts and maintenance, driver wages, fuel consumption, insurance, etc.), “the break-even point deviates from the huge upfront investment.”

Holmberg said the two key factors in the TCO equation are battery technology and charging infrastructure, which are issues faced by every EV manufacturer. Batteries remain the largest expense for electric vehicles, so reducing the cost, as well as the battery’s energy capacity, is a major focus of R&D investment by truck OEMs.

“We need to have higher energy density and cheaper batteries to get there,” Holmberg said. “Looking at the evolution of battery cost curves, that will come in due time. I would say we’re nowhere near It will be several years before we reach the break-even point, at which point it makes perfect economic sense to convert.”

A study last year by the International Council for Clean Transportation and Energy Innovation found that battery-electric long-haul trucks could have a lower TCO than diesel trucks by 2030.

Mack currently outsources its batteries, but a move by its parent company could eliminate those middlemen. In 2022, the Volvo Group announced plans to build a large-scale battery factory in Sweden, and is expected to achieve large-scale production by 2030. Closer to home, in early February, Volvo Group completed the acquisition of US battery and electric bus Proterra. Last summer, the manufacturer filed for bankruptcy under Chapter 11 of the US Bankruptcy Code, with a loss of US$210 million. The deal includes a battery module and battery pack development center in California and an assembly plant in South Carolina.

As with the consumer EV market, where Tesla stands to gain billions of dollars from its early investment in nationwide charging, building an adequate and reliable national battery charging infrastructure is a challenge facing the trucking industry. It is also an important part of the federal and state government push to transition to commercial electric vehicles, especially heavy-duty trailers traveling long distances.

Many new startups, including Freewire, TeraWatt Infrastructure, WattEV and charging point, charging stations are being built across the country. In January this year, Volvo Group North America, Daimler Trucks and Navistar, which together account for about 70% of the U.S. medium- and heavy-duty truck market, established the “Powering U.S. Commercial Transportation” alliance to promote the construction of charging infrastructure.

The Biden administration’s National Electric Vehicle Infrastructure Package, enacted under a bipartisan infrastructure law, plans to provide $5 billion over five years to help build charging networks across the country. The Inflation Reduction Act also provides tax credits for businesses to charge equipment.

While the trucking industry and government entities work to make long-distance electric vehicle transportation more cost-effective, short-haul routes are more feasible. “Commercial vehicles operating in one shift, traveling less than 100 miles per day and returning to local charging centers are very useful for maximizing the benefits of BEVs,” Rundle said. This also explains the use of Amazon, Walmart, FedEx and UPS. Reason: As short-haul private shippers, they are electrifying their fleets. There is an increase in the number of electric haulage trucks at seaports and terminals transporting containers to local destinations.

Mack’s two electric vehicles are suitable for short-distance scenarios and the company’s electric vehicle strategy. “MDe can carry light loads, operate in urban environments, and return to the warehouse every night,” Randall said. As of mid-February, Mack only had a small amount of MDe on the way, he said, “and we still have a large backlog of orders to deliver in the first half of the year.”

Mack makes internal combustion engines and electric MDs at its plant in Roanoke, Virginia, and just announced it will invest $14.5 million to expand the facility. Randall hinted that Mack will be working on building a heavy-duty electric vehicle for regional transportation, including hauling. “We think we’re in a market where it makes the most sense and there’s continued interest in adopting this technology,” he said.

Mack Trucks’ network of nearly 420 dealers has played an integral role in this adoption. About 80 of them have or are in the process of receiving electric vehicle certification, which requires meeting Mack’s safety, infrastructure, charging and tooling requirements.

To support dealers and address customer hesitancy to adopt electric vehicles, the company offers a fleet management program “turnkey solution” that covers all aspects of charging infrastructure development. Mack also offers an ElectriFi Subscription leasing program that allows customers to bundle chassis and body mileage, charging, applicable incentives, physical damage insurance and maintenance fees into monthly payments.

“As electric vehicles continue to grow as a percentage of total sales, we’re going to need our entire dealer network (to be certified as electric vehicles),” said Randall, who predicts that one day every Mack truck will have a copper on the hood. Colored Bulldog.