Trucks

Why a truck’s total cost of ownership is so vital when it comes to alternative drivelines

Pernilla Kemlin
2024-09-16
Alternative fuels Electromobility
Author
Pernilla Kemlin
Product Manager, FM/FMX

While trucks powered by alternative fuels typically cost more than diesel, they also affect the long-term cost of ownership. Only by looking at the full picture can you know what a truck running on alternative fuels really costs.

Calculating a truck’s total cost of ownership (TCO) is an effective approach to purchasing a new vehicle because it provides a holistic view of what it really costs a business.
 

Rather than just focusing on the purchase price, a TCO considers all the direct and indirect costs associated with a given vehicle over its expected lifetime, including the cost of fuel, maintenance and repairs, residual value, taxes, etc.
 

For conventional diesel trucks, most businesses are familiar with the costs, making the process relatively straight-forward. However, with alternative drivelines such as battery electric vehicles and gas-powered vehicles, many of the variables that go into a TCO calculation are affected.
 

“Battery electric and gas-powered trucks have higher purchase prices than diesel. However, there are potential cost savings in other areas that can help offset this,” says Pernilla Kemlin, Product Manager, Volvo Trucks. “For some businesses, transitioning to an alternative fuel is already cost-effective from a TCO perspective.”
 

How alternative fuels can bring down operating costs

The biggest saving that can be made by transitioning to an alternative fuel is through reduced fuel costs. It all depends on the prices of fuel, which can vary from market to market, however fuels such as electricity and LNG can often be cheaper than diesel.

With battery-electric trucks, the tank-to-wheel efficiency is up to 70-80% better than diesel, meaning less energy is lost during operation.
 

In addition, initiatives such as the EuroVignette directive and other CO2-based road tolls will see CO2 emissions increasingly taxed. This will have a significant impact on TCO calculations when comparing diesel with any zero-emission fuel.

“If you can use an alternative fuel that is cheaper than diesel, then the more you run the vehicle, the cheaper it will be for your business,” explains Pernilla. “For example, if you’re in a market where electricity is cheap and diesel is expensive, then from a TCO perspective, an electric truck could already prove to be more cost effective than a diesel truck.”

How do maintenance and repair costs affect the total cost of ownership?

When it comes to electric trucks, the cost of repairing or replacing the battery can represent a significant cost, although this will seldom need to be done. On the other hand, electric drivelines consist of fewer moving parts compared to internal combustion engines, resulting in less wear-and-tear on components. Nor is there a need for changing oils or filters, as is common in a diesel engine.
 

“At this stage, it is too early to see a clear cost difference between servicing an electric truck compared to diesel, however the forecast and general expectation is that it will be in the near future,” says Pernilla. “Service intervals for electric trucks are also expected to be longer, meaning less downtime.”
 

This is the case with passenger cars, where it is estimated that maintenance costs are around half of the internal combustion engine vehicles. 

If you’re considering making the transition to an alternative fuel, calculating the TCO is an excellent starting point. It will give you a better idea of how financially viable it really is.”

What is the outlook for TCO calculations in the coming years? 

As the cost of producing lithium-ion batteries and electric drivelines continues to decline, TCO calculations for electric trucks are expected to improve further in the coming years.
 

In fact, recent research from the independent think tank Energy Innovation in the US, estimates that electric heavy-duty trucks including long-haul, will be able to offer a positive TCO over its lifetime by 2030, even without taking into account any government subsidies or tax incentives.
 

When it comes to LNG and Bio-LNG, energy prices have stabilized and the TCO is already positive in many use cases. It should improve even more as production and refueling infrastructure continue to expand.
 

However, that does not mean that truck owners need to wait to start exploring their options. For some businesses, it is already cost-effective to transition away from diesel. And since so many variables in TCO equations are continuously changing, the situation could rapidly improve for many other businesses in the coming years.
 

Having a fleet of low- and zero-emission vehicles can also help a business win new contracts from customers looking to improve their own sustainability footprints.
 

“If you’re considering making the transition to an alternative fuel, calculating the TCO is an excellent starting point,” says Pernilla. “It will give you a better idea of how financially viable it really is. It might prove to be more cost-effective than you realize. And even if it’s not viable today, you will at least get a better idea of what is needed before it will be.”
 

To learn more about the different alternative fuels available for heavy-duty trucks and finding the best fit for your business, you might be interested in reading:

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