How Heavy Duty Electrification Will Charge Forward in 2024
Looking back on the last 12+ months, we’re not quite as far along on the pathway to electrifying heavy duty transportation as we’d predicted. The high purchase price of EV trucks, compounded by a lack of adequate charging infrastructure, puts us farther away from the “hockey stick” adoption curve that we keep expecting to take off.
Things are looking up, though. 2024 is poised to be the year the tide begins to turn. Keep reading for our take on where we see heavy duty electrification heading in the coming months — and the ways solutions providers like Terawatt are playing our part in the transition.
The state of freight
The post-COVID truck surplus mixed with continued global economic uncertainty has led to continued uncertainty for carriers nationwide. Volatility in demand, fluctuating fuel prices, geopolitical tensions, and supply chain disruptions further intensified the freight downturn in 2023. Cost efficiency has therefore been even more of a priority than usual, making it difficult for carriers to plan and execute on innovative — yet costly — strategies like electrification.
Most experts continue to predict that this trough will last into late 2024 or beyond. The tides will eventually turn — after all, these cycles typically last around 2-3 years — and demand for transportation services will likely rebound, further fueling the industry's recovery. But navigating 2024 successfully is imperative to spur on that full recovery in 2025 and beyond.
Fleet electrification in 2024: Glimmers of hope on the road to widespread adoption
Amidst these challenging market conditions, making costly investments in sustainability and innovation can get deprioritized — especially as EV truck costs remain 2-3x as high as its diesel counterpart. A few key political and economic factors will therefore likely remain the primary catalysts for electric adoption in this year.
On the policy side, regulation like the Advanced Clean Fleets (ACF) Regulation is pushing heavy duty fleets to start transitioning to zero-emission vehicles.
On the economic front, continuously improving technology will aid in further reducing the total cost of ownership (TCO). According to The International Council of Clean Transportation (ICCT), longer haul BEVs are slated to catch up to their diesel counterparts by 2030. TCO will also improve with greater mileage and smaller, more powerful batteries. Battery prices are expected to decrease by 40% by 2025/2026, according to Goldman Sachs. Bloomberg NEF's annual report further confirms this trend, revealing a record-low global average battery price of $139/kWh—down from $161 in 2022 and lower than any year on record.
Additionally, many long-awaited charging infrastructure projects will finally begin coming to fruition this year — Terawatt alone, for instance, is bringing over 20MW of charging power online in 2024 across several charging sites, including 3 devoted to heavy duty (Rancho Dominguez, Commerce, and Rialto, CA).
Looking Ahead: EV charging ecosystem collaboration is critical for sustainable success
In short, given the current dynamics, we’ve seen that fleets are open to beginning the EV transition but struggle to make it pencil financially at scale. That’s why a gradual approach seems to make sense for many, and we are excited to see EV truck operations beginning to get rolled out in 2024 — however small they may be in scale right now.
With all of the shorter haul applications that better suit today’s battery ranges, we first and foremost predict that fleets will find success by adopting a hybrid charging approach if offsite charging alone does not seem like a viable option for their business: Leveraging both charging on their own sites along with offsite, or en-route, charging offerings. This unlocks a greater variety of use cases, including both a 30-minute range extension charge, or a quick charge during slip-seating operations, as well as overnight charging. It also unlocks an additional full charge in a minimal amount of time and supports double-shifted truck operations. Gaining an additional 150-250 miles of capacity for a truck can dramatically change the total cost of ownership (TCO) and mean that a fleet can now do 2x as much business per truck as compared to overnight charging alone.
We also see fleets experiencing delays in getting their own charging infrastructure up and running, and we expect these delays — both with power as well as equipment — to intensify in 2024. Mitigating these types of issues is core to our business, and we have a proven track record of deep collaboration with utilities and reduction in procurement time. We hope we can step in and provide support to any who are recognizing just how hard it is to build and manage infrastructure on their own.
Simultaneously, fleets should be thinking about how they’ll integrate HD BEVs into their operations once battery capacity does eventually unlock the long haul use case. On the infrastructure side, we plan to continue building upon our highway corridor strategy this year — and leverage key tailwinds, such as the $63.8 million in grant funding we were awarded in partnership with the New Mexico Department of Transportation — to prepare corridor sites in our existing portfolio for eventual operations.
Conclusion
We have seen this type of transition play out with the emergence of data centers—it wasn’t easy or cheap, but the tidal wave did come. The anticipated emergence of fleet electrification is expected to follow a trajectory similar to the scale-up of data centers, characterized by a "J" curve of demand for energy and grid capacity. Advancements in vehicle technology, charging systems, and intelligent software, along with integrated telematics, will lead to greater efficiencies in heavy duty charging.
For fleets thinking about their EV needs in 2025 and 2026, the time to start planning is now, regarding both vehicles AND infrastructure. Early adoption can be choppy, sometimes with a cost premium, and compliance driven. By embracing strategic planning, collaboration, and innovation, 2024 can be the year we finally enable fleets to more seamlessly integrate electric vehicles into their operations, driving sustainability goals while maximizing productivity and profitability.