Electric trucks overtaking diesel on lifetime cost

Electric trucks are on course to overtake diesel equivalents on lifetime cost – and smart policies can accelerate this transition, new research shows.

Researchers compared the “total cost of ownership” of commercial vehicles – including purchase price, fuel/electricity and maintenance over the lifetime of a vehicle.

They found a “tipping point” (where zero-emission vehicles become the cheapest option) has already been reached in some places – unlocking benefits for economies, air quality and the climate.

Analysis reveals multiple effective policies, especially “mandates” that require a rising proportion of sales to be zero-emission vehicles.

The findings are published in a report by the Economics of Energy Innovation and System Transition (EEIST) programme, led by the University of Exeter, produced in partnership with the International Council for Clean Transportation.

“We were surprised by our results – the tipping point is much closer than we expected,” said lead author Dr Amir Akther, from Exeter’s Global Systems Institute.

“In some regions and vehicle categories – such as heavy- and medium-duty trucks in China, and vans in India and China – electric vehicles are already cheaper over their lifetimes than their diesel counterparts.

“In other regions, cost parity is expected before 2033.”

Simon Sharpe, Managing Director of S-Curve Economics, added: “Electric trucks are already becoming cheaper than their diesel-drinking predecessors.

“The right policies can drive even faster cost reduction, saving more money and increasing the productivity of all businesses that transport goods by road.”

The switch to electric cars is well under way, and is happening much faster than most analysts expected – with EVs already accounting for about 20% of global car sales.

Global sales of full-electric trucks are much lower – just 0.9% in 2023 – but this is also growing rapidly. Sales grew by 35% in 2023 compared to 2022, with China leading the way and Europe catching up.

Manufacturers are responding, with 750 electric truck models now available in China, Europe and North America.

While purchase costs of electric trucks remain higher than diesel equivalents, technology is becoming both better and cheaper. For example, the cost of lithium iron phosphate batteries – the main choice for electric trucks – fell by 86% between 2013 and 2024.

Operating costs are already significantly lower for electric trucks compared to diesel.

Policy roadmap

The challenge for governments is to identify the right policies to advance this transition.

The researchers used real-world data and detailed models to assess the current situation and compare the effectiveness of policies.

“Regulatory policies, particularly zero-emission vehicle mandates, but also fleet-wide emissions reduction standards, are generally the most effective way to get electric trucks on the road,” Dr Akther said.

“Subsidies and taxes are less effective on their own, but subsidies can help grow the market for zero-emission vehicles, particularly after some critical demand was met.

“We also found that policies can work really well when used in combination.”

Felipe Rodriguez, Heavy-Duty Vehicles Program Director, Europe and China, at the International Council on Clean Transportation, said: “Strong supply-side regulations, like CO₂ standards and sales requirements, have proven effective in accelerating the transition to electric cars.

“This analysis suggests that, with the right mix of measures and policy sequencing, they can play a similarly crucial role in the shift to zero-emission trucks.”

Multiple benefits

Pollution from transportation sources is estimated to cause 400,000 deaths per year worldwide, and diesel vehicles play a disproportionate role.

In India, trucks make up just 3% of all road vehicles – but freight contributes nearly 40% of road transport’s greenhouse gas emissions in the country.

Switching to electric trucks could also help us tackle climate change, as road freight is responsible for around 6% of global CO₂ emissions.

And switching to clean trucking makes economic sense – reducing reliance on expensive oil imports and cutting businesses’ costs, which could help to boost productivity, growth and employment.

The study does not explicitly model infrastructure, although infrastructure costs are included in the calculation of vehicle lifetime costs, to ensure a fair comparison. The researchers say investment in charging points and supporting energy grids would be vital.

This work was funded by the UK Government’s Department for Energy Security & Net Zero as part of the EEIST programme.

The contents of this report represent the views of its authors, and should not be taken to represent the views of the UK government or the organisations to which the authors are affiliated.

The report is entitled: “Driving the transition to zero-emission trucks.” Read the full report at https://eeist.co.uk/policybriefs/