Articles

    Electric Trucks Present a COVID-19 Opportunity

    Originally posted by Mike Roeth, NACFE | May 14, 2020 | ACT News | Original Article

    There is an old expression that says something like: it’s an ill wind that blows no good. The meaning, of course, is that even during bad situations, there can be positive results. COVID-19 made me think of this expression. While there is no denying the ill effects of the pandemic, there has been some good to come from it in the form of a noticeable improvement in air quality, especially in urban areas. It is probably safe to assume that most people will see this as a positive development and may begin to put pressure on local governments to figure out ways to keep the air clean, perhaps by instituting near-zero and zero emissions zones.

    Electric Truck Development Boon

    This could be a boon for the development of electric trucks, but it is not the only reason we may see technology for electric trucks advance more quickly than expected.

    Traditional truck makers that have existing product lines are experiencing cash flow issues as they shut down production lines for several weeks and as demand for replacement or additional vehicles is low. While areas like food and drug distribution are booming, other markets are not faring as well, and trucks are sitting empty. The lack of cash flow is affecting research and development, and we have seen layoffs and furloughing of key staff.

    Contrast this to the electric truck startups, most of which are riding on venture capital. They are not expected to have commercial production vehicles available until 2021 or 2022. Since they do not have a product line to support today, they are not impacted as deeply by the economic slowdown as they continue to work on the development of intellectual property, complete vehicle designs, and work to get prototype and early production vehicles built.

    There is an opportunity here for these companies to accelerate their development process and try to bring products to market sooner to capitalize on what is likely to be a higher demand for clean vehicles post-pandemic. Traditional manufacturers have many choices to make when considering reductions in their product development portfolio. They can also choose to maintain or even accelerate their electric truck plans as well.

    Low Interest Rates can Promote Electric Truck Growth

    All of this is happening at a time when interest rates to borrow money are low. Typically, in situations like this, people borrow money and use it fund projects they have had on the back burner. This could mean that fleets that held off on ordering electric trucks or being part of beta testing may venture into the electric truck space to get familiar with both the benefits and challenges, and to see how the vehicles perform in their specific duty cycles. I think by now it is clear to most people that electric trucks will play a significant role in the future of trucking. With the cost of borrowing money so low, fleets can take a chance and get comfortable with electric trucks to help get through the learning curve early.

    Folks who are citing low fuel prices as something that will deter the growth and development of electric trucks need to be reminded of the historic volatility of traditional fuel prices. Today, fuel prices are artificially low, as many folks are working from home instead of from their normal workplace. People are limiting other activities, so demand for fuel is artificially down. While it is likely that once the pandemic is over some people may continue to work from home, many people will return to their offices, and most will return to their normal driving patterns. Therefore, we will see more vehicles on the road and the demand for fuel will increase.

    Read the full article on ACT News