Ryder Examines Economic Impacts of Converting to Commercial Electric Vehicles (EV) in Current Market

MIAMI--(BUSINESS WIRE)--May 8, 2024--

Ryder System, Inc. (NYSE: R), a leader in supply chain, dedicated transportation, and fleet management solutions, releases a quantitative analysis of the potential economic impacts of converting commercial diesel vehicles to electric vehicles (EV) in today’s market. With evolving state and federal legal requirements aimed at transitioning fleets to zero-emission vehicles, Ryder customers frequently ask about the costs, benefits, and complexities of converting to electric – as EV technology and charging infrastructure are still developing. As a result, Ryder published “Charged Logistics: The Cost of Electric Vehicle Conversion for U.S. Commercial Fleets.”

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Based on representative network loads and routes from Ryder’s dedicated fleet operations in today’s market and other factors, the data shows the annual total cost to transport (TCT) by EV versus diesel is estimated to increase across the board – ranging from up to 5% for a light-duty transit van to as much as 114% for a heavy-duty tractor (depending on the geographic area). And, for a mixed fleet of 25 light-, medium- and heavy-duty vehicles, the analysis shows an increased TCT of up to 67% for an all-electric fleet.

“While Ryder is actively deploying EVs and charging infrastructure where it makes sense for customers today, we are not seeing significant adoption of this technology,” says Robert Sanchez, chairman and CEO of Ryder. “For many of our customers, the business case for converting to EV technology just isn’t there yet, given the limitations of the technology and lack of sufficient charging infrastructure. With regulations continuing to evolve, we wanted to better understand the potential impacts to businesses and consumers if companies were required to transition to EV in today’s market.”

Methodology

Ryder examined the TCT for diesel engines versus electric technology in the light-, medium-, and heavy-duty vehicle classes. The analysis is based on representative network loads and routes from Ryder’s dedicated fleet operations, which includes more than 13,000 commercial vehicles and professional drivers. It factors in the cost of the vehicle, maintenance, drivers, range, payload, and diesel fuel versus electricity, while also accounting for EV charging time and equivalent delivery times. The analysis also assumes the accessibility and use of the fastest applicable commercial vehicle chargers – though this network infrastructure is not yet built out.

First, Ryder conducted one-to-one comparisons for diesel and EV transit vans, straight trucks, and heavy-duty tractors, using cost assumptions from California, which typically has the highest fuel, electricity, and labor costs in the country, and in Georgia, where costs are generally lower.

Second, as most companies have more than one vehicle, Ryder applied the individual costs to a fleet of 25 vehicles of mixed classes and types, and compared the cost of owning and operating that fleet in California and Georgia. The fleet mix is based on the overall mix of commercial vehicles in the U.S., according to third-party data (Polk Data Services), and includes 11 light-duty vans, four medium-duty straight trucks, and 10 heavy-duty tractors.

TCT Impact in California: One-to-One Comparison

For California, one-to-one comparisons of various classes and types of commercial diesel vehicles versus their EV counterparts show the annual TCT for EVs increases across the board.

TCT Impact in Georgia: One-to-One Comparison

In Georgia, Ryder conducted the same one-to-one comparisons. However, the variance in TCT for a diesel vehicle versus an EV is greater. Operating EVs in Georgia results in a higher cost disadvantage than in California, because Georgia’s lower fuel and energy costs do not provide the same level of savings when transitioning from fuel to electricity.

TCT Impact in California and Georgia: Mixed Fleet

Ryder then applied the TCT for individual vehicles to a mixed fleet of 25 light-, medium-, and heavy-duty commercial vehicles operating in California versus Georgia, including the assumption that a company would need nearly two heavy-duty EV tractors and more than two drivers to haul the same load on the same route as one heavy-duty diesel tractor.

In this scenario, a company converting 10 heavy-duty diesel tractors would need nearly 19 EVs and 21 drivers in order to provide the same level of service. This increases the total number of vehicles in the fleet from 25 to nearly 34 and drivers from 27 to nearly 36. Therefore:

Inflationary Impact

Ryder’s analysis also considers the potential inflationary impact if companies were required to convert to electric vehicles today. Based on the TCT for a mixed EV fleet, and assuming companies pass the increased TCT on to consumers, Ryder estimates those increases could cumulatively add 0.5% to 1% to overall inflation.

Key Takeaways

“There are specific applications where EV adoption makes sense today, but the use cases are still limited. Yet we’re facing regulations aimed at accelerating broader EV adoption when the technology and infrastructure are still developing,” says Karen Jones, EVP and head of new product development for Ryder. “Until the gap in TCT for heavier duty vehicles is narrowed or closed, we cannot expect many companies to make the transition; and, if required to convert in today’s market, we face more supply chain disruptions, transportation cost increases, and additional inflationary pressure.”

“While mass adoption of EVs is not being required at this time, the purpose of this analysis was to quantify the gap in the total cost to transport goods with diesel versus electric vehicles and to understand what it will take to make commercial EVs economically viable at scale,” adds Sanchez. “Today, it would require significant advancements in EV technology to improve range and payload, and according to at least one industry estimate, nearly $1 trillion in charging infrastructure and power grid upgrades. While EV technology is still evolving, we are evaluating multiple ways to reduce emissions, including electric, natural gas, hydrogen, hybrids, and carbon capture, as well as continuing to advance diesel emissions technology. When a new technology is ready for the market, it has been our experience that businesses will see the benefits and broader adoption will follow.”

For a complete copy of the analysis and further insights from Ryder on the road to electrification, download a copy of “Charged Logistics: The Cost of Electric Vehicle Conversion for U.S. Commercial Fleets” here or go to ryder.com/evtct.

About Ryder’s EV Solutions

As one of the largest and longest-running fleet owners in North America, with more than 90 years of experience in transportation, Ryder manages a fleet of nearly 250,000 commercial vehicles. The company has introduced EVs into its lease and rental fleets and continues to work with multiple vehicle manufacturers to provide new electric solutions to customers. Ryder also recently launched RyderElectric+, which provides electrification advisors, vehicles, charging, telematics, and maintenance to help facilitate the seamless adoption of EVs.

About Ryder System, Inc.

Ryder System, Inc. (NYSE: R) is a fully integrated port-to-door logistics and transportation company. It provides supply chain, dedicated transportation, and fleet management solutions, including warehousing and distribution, contract manufacturing and packaging, e-commerce fulfillment, last-mile delivery, managed transportation, professional drivers, freight brokerage, nearshoring solutions, full-service leasing, maintenance, commercial truck rental, and used vehicle sales to some of the world’s most-recognized brands. Ryder provides services throughout the United States, Mexico, and Canada. In addition, Ryder manages nearly 250,000 commercial vehicles, services fleets at 760 maintenance locations, and operates nearly 300 warehouses encompassing more than 100 million square feet. Ryder is regularly recognized for its industry-leading practices; technology-driven innovations; corporate responsibility; environmental management; safety, health and security programs; military veteran recruitment initiatives; and the hiring of a diverse workforce. www.ryder.com

Note Regarding Forward-Looking Statements: Certain statements and information included in this news release are “forward-looking statements” within the meaning of the Federal Private Securities Litigation Reform Act of 1995. These forward-looking statements, including our expectations with respect costs of EVs and the related costs of maintenance, charging infrastructure, labor and insurance, as well as our expectations related to the impact of converting diesel fleets to EVs on supply chains and inflation, are based on our current plans and expectations and are subject to risks, uncertainties and assumptions. Accordingly, these forward-looking statements should be evaluated with consideration given to the many risks and uncertainties that could cause actual results and events to differ materially from those in the forward-looking statements including those risks set forth in our periodic filings with the Securities and Exchange Commission. New risks emerge from time to time. It is not possible for management to predict all such risk factors or to assess the impact of such risks on our business. Accordingly, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

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Ryder releases a quantitative analysis of the potential economic impacts of converting commercial diesel vehicles to electric vehicles (EV) in today’s market. (Photo: Business Wire)

Using armored vehicles and backhoes to shove aside charred barricades, French security forces worked Sunday to retake control of the highway to the international airport in violence-scorched New Caledonia, shuttered because of deadly unrest wracking the French Pacific archipelago where indigenous people have long sought independence from France.

An eventual reopening of the Nouméa-La Tontouta airport to commercial flights could allow stranded tourists to escape the island where armed clashes, arson, looting and other mayhem have prompted France to impose a state of emergency. The airport, with routes to Australia, Singapore, New Zealand and other destinations, closed Tuesday as protests against voting reforms opposed by pro-independence supporters degenerated into widespread violence, leaving a vast trail of destruction.

French Interior Minister Gérald Darmanin, posting on social media platform X, said the “major operation” was “aimed at fully regaining control” of the RT1 highway between the capital, Nouméa, and the airport 60 kilometers (nearly 40 miles) to the northwest. He said more than 600 gendarmes were deployed. The number spoke to the difficulty of clearing roads of charred debris and barricades erected by pro-independence demonstrators and residents who have banded together to try to protect homes and livelihoods against rioters and looters.

The police effort to reopen the airport road cleared nearly 60 barricades on its first day, French authorities in New Caledonia' posted on X.

The French High Commission, in a statement, described the night of Saturday to Sunday as “calmer" but still spoke of two blazes and the looting of a gas station, without giving details. A 6 p.m. to 6 a.m. curfew is in effect and security forces have been granted emergency powers, including house detention for people deemed a threat to public order and expanded leeway to conduct searches, seize weapons and restrict movements, with possible jail time for violators.

The High Commission also said 230 people it described as rioters have been detained.

Nouméa’s mayor, Sonia Lagarde, told French broadcaster BFMTV on Sunday that fully clearing the airport road could take “days and days” because of "an enormous amount of burned carcasses of cars.”

“The situation is still dramatic,” she said.

Gen. Nicolas Matthéos, head of the archipelago’s public order force of gendarmes, said some barricades had been booby-trapped with gas canisters and reinforced with “walls of vehicles."

The foreign ministers of Australia and New Zealand said they are seeking French green lights to fly out their nationals.

“French authorities advise the situation on the ground is preventing flights. We continue to pursue approvals,” the Australian minister, Penny Wong, posted on X.

On Saturday, French authorities reported a sixth fatality in the violence, following an exchange of gunfire at a barricade in the north of the main island, at Kaala-Gomen.

There have been decades of tensions between indigenous Kanaks seeking independence and descendants of colonizers who want to remain part of France.

The unrest erupted Monday as the French legislature in Paris debated amending the French constitution to make changes to New Caledonia voter lists. The National Assembly in Paris approved a bill that will, among other changes, allow residents who have lived in New Caledonia for 10 years to cast ballots in provincial elections.

Opponents fear the measure will benefit pro-France politicians in New Caledonia and further marginalize Kanaks who once suffered from strict segregation policies and widespread discrimination.

FILE - Smoke rises during protests in Noumea, New Caledonia, Wednesday May 15, 2024. Using backhoes to shove aside charred vehicles, French security forces worked Sunday, May 19, 2024, to retake control of the highway to the international airport in violence-scorched New Caledonia, shuttered because of deadly unrest wracking the French South Pacific island where indigenous people have long sought independence from France. (AP Photo/Nicolas Job, File)

FILE - This handout photo provided by the French Army shows security force embarking a plane to New Caledonia at the Istres military base, southern France, on Thursday, May 16, 2024. Using backhoes to shove aside charred vehicles, French security forces worked Sunday, May 19, 2024, to retake control of the highway to the international airport in violence-scorched New Caledonia, shuttered because of deadly unrest wracking the French South Pacific island where indigenous people have long sought independence from France. (Etat Major des Armees via AP, File)