EV big rigs already make sense for half of the $4 trillion freight truck market, says Einride CEO

The diesel-powered trucking industry moves a majority of freight, up to 70% in the U.S. alone. In California, trucks are the largest single source of vehicle-produced air pollution that “spew 70% of the state’s smog-forming gases and 80% of carcinogenic diesel pollutants,” according to the California Air Resources Board, making the trucking sector a key part of the emissions reduction challenge.

Swedish EV trucking startup Einride has been able to so far go toe-to-toe with Tesla and its Semi in attracting top corporate clients. Both have deals with PepsiCo — Einride in the U.K. and Tesla in California.

Einride also has global shipping giant Maersk, GE Appliances, AB Inbev, Bridgestone and Beyond Meat as customers.

While many of these deals are narrow to start with, Einride founder and CEO Robert Falck says the business case already exists today for many more freight players to make the transition from diesel to electric, up to half of the industry, according to Falck.

“In the $4 trillion freight mobility space, between 40%-50% should be electric driven by the business case today,” Falck said on CNBC’s “Worldwide Exchange” in an interview on Thursday after his company ranked No. 13 on the 2023 CNBC Disruptor 50 list. “That means a $2 trillion opportunity already today,” he added.

Einride is one of three companies focused on trucking to make the 2023 Disruptor 50 list — Convoy, founded by former Amazon executives, came in at No. 47, and Flock Freight, the only certified B Corp in the freight sector, came in at No. 20. Additional logistics companies to make the list focused on technology-based solutions in transportation and climate include Flexport and Lineage Logistics.

The numbers on the EV cost equation, though, remain less than an exact science. A month ago, when appearing on CNBC to discuss the new deal with PepsiCo, Falk estimated that 30%-40% of the market could make the EV transition based on cost today. Not much has changed for the better in the math in just a month. In fact, diesel prices continue to trend lower, and haven’t been this low since before Russia invaded Ukraine, taking away a short-term advantage for the EV argument.

Diesel prices hit an all-time high last year in June of last year, and have fallen by 25% or more since then.

“In the near-term, of course, the business case for diesel becomes slightly better,” Falck said in the April interview.

But he stressed that the big brand examples of companies already signing on as clients prove the case. “They want to get the benefits of going sustainable but would not be willing to do it without a cost-competitive way,” he said on Thursday.

Diesel vs. EV economics

In many markets, independent of short-term movements in diesel prices, EV is cheaper for trucking, according to Falck, though it does depend on the cost of electricity. And as trucking hardware becomes cheaper and more widely available, the case for the EV transition will increase.

Part of the challenge is in the recharging, In September, the Department of Transportation approved EV-charging station plans for all 50 states, Washington, D.C., and Puerto Rico, covering about 75,000 miles of highways. States also have access to more than $1.5 billion in funds to help construct the chargers.

Einride’s business model, Falck stressed, and the business case for its customers, is not just about the truck manufacturing — it does not manufacture the trucks itself — but the turnkey solution that extends from the vehicle to the trailer design to the infrastructure (e.g. charging) to operations across the transportation system and its digital freight network solution.

In freight, unlike the consumer market, “it’s not about range, it’s about how to secure the business case,” he said.

Its trucks in the Class 8 tractor-trailer niche have a range of 400 miles.  

Independent research does support the idea of more freight going EV. Nonprofit newsgroup Cal Matters found that the total cost of buying and operating an electric semi-truck could be anywhere from $765,000 to $1.1 million, while a gas or diesel truck ranges from $919,000 to $1.2 million.

Interest in the state of California is high because the California Air Resources Board is requiring truck manufacturers to begin phasing in available heavy-duty EV technology by 2024. But in the state, which is a leader in climate technology and climate regulation — and one of the world’s largest economies — for now at least, the larger focus is on short-haul trucking.

California has set the goal of all zero-emission short-haul drayage fleets — for operations in and nearby ports — by 2035. Schneider, a truckload, intermodal and logistics service, announced its battery-electric truck (BEV) fleet back in 2021, and the first BEV arrived at a Southern California port this year.

″We’re going to be operating those in and out of railheads for intermodal customers, and so we’ll start with five taking this month and will be up to about that hundred number by the time we get through the calendar year,” Schneider CEO Mark Rourke said on CNBC’s “Squawk on the Street” in February.

Autonomous big rigs

But bigger trucks are critical for climate goals. Medium and heavy trucks make up only about 4% of vehicles in the U.S., but because of their larger size and greater travel distances, the vehicles consume more than 25% of total highway fuel and represent nearly 30% of highway carbon emissions, according to the Department of Energy.

While Einride is making bold calls about the EV transition today, Falck is cautious on one aspect of the technology that gets a lot of attention: autonomous trucking. He said Einride does see the short-haul market being a better fit today for the autonomous transition, and described the process of moving to autonomous trucks as “gradual.”

For most goods being moved by autonomous electric vehicles today, it is inside warehouses and logistics centers. “We’ve taken the same approach,” he said. “We start with manual electric and gradually introduce more and more autonomy. We’re already doing autonomous for clients, but not everywhere. We start with the simple applications, fenced-off areas … low speeds.”

“We gradually grow into this,” Falck said. “This is not just about making a truck autonomous, it’s changing the entire transport system.”

That will be measured in decades, in his option. “In 25 years, we will predominantly be electric and autonomous,” Falck said.

—CNBC’s Kaitlin Balasaygun contributed reporting.