Ford
- Electric trucks are a huge part of the push towards EVs.
- One major part of that is fleet customers.
- But as the price war hits pickup trucks, that puts pressure on a crucial customer base.
Electric trucks, long touted as a key to broader EV adoption, are a wildcard in the electric vehicle price war.
Automakers risk irking some of their customers if the value of their trucks drops overnight — and that will be especially problematic once price cuts hit their all-important fleet customers.
Car companies last year started doling out large electric vehicle orders to commercial customers, which have long been considered the tip of the spear for the EV market. As EV technology allowed for bigger batteries and longer ranges, commercial customers like Amazon, FedEx, and Walmart began to see potential cost savings in electric trucks and vans.
Automakers are investing billions of dollars to electrify their product lineups not just for the average car buyer, but also for these fleet customers. Whether it's for a local mom-and-pop delivery shop or a car rental firm or a contracting company, EVs make sense for moving goods and services because of the more predictable mileage and use cases. Charging can be done in batches and at scheduled times.
But going electric is also a huge commitment. Not only does buying EVs look to be a substantial upfront cost to fleet owners, there are also logistical pains to be worked through as it relates to charging infrastructure and managing the fleet with needs that differ from one fueled by gas.
Fleet owners are largely financially motivated — whether related to compliance requirements or tax breaks — and if they go electric after all of these hurdles, they want to know they're sitting on a good investment. The price war throws a wrench at that.
"You buy 10 F-150 Lightnings at $65,000 and then you wake up the next morning and they're $55,000, you're probably going to think twice about replacing more [internal combustion engine] trucks with an EV — or look elsewhere," Robby DeGraff, AutoPacific analyst, told Insider. "You're watching your numbers, you're watching your budget, you're watching the profit you're making."
Where the problem lies
Automakers have been banking on their fleet customers to go electric since the beginning of their electrification journeys, Tyson Jominy, a vice president analyzing automotive at J.D. Power, said via email.
Rivian only has three vehicles right now, and it is dedicating one for major commercial customers like Amazon. Meanwhile, Ford launched the Lightning with the Pro trim for work-grade trucks, and GM's BrightDrop business is built with the fleet buyer in mind.
About 20% of the auto industry's fleet business comes from light-duty pickup trucks like the Lightning or Silverado EV. Another 38% comes from heavy-duty pickup trucks, according to J.D. Power. Fleets are hungry for inventory — and more, they're willing to pay for it, Jominy said.
Still, automakers can't afford to jerk these buyers around with EV price changes. Fleet buyers are sensitive to fluctuations in resale values and the delicate profit margin equation of fleet operation can be thrown out of whack quickly if vehicle values are harder to pin down, analysts say.
Dealers left on the hook again
The uncertainty around where the electric truck market will land in terms of pricing and volume leaves one group in the lurch: dealers.
Smaller fleet customers are also very important for dealers, and electric trucks are a big gamble to sell to these customers, dealers who spoke with Insider said. These dealers asked to remain anonymous, but Insider knows their identities.
This adds to the risk dealers are already taking by handling individual orders for electric trucks. A new trend of placing multiple orders on electric trucks in hopes that one will arrive more quickly leaves dealers with high-content, expensive trucks sitting on their lot when their manufacturers lose the race.
This becomes an even scarier proposition when it comes to fleets, the dealers said.