Ricardo total cost of ownership-economics of emerging fleet technologies

www.ricardo.com

© Ricardo plc 2013

Total Cost of Ownership: Economics of

Emerging Fleet Technologies

NAFA Conference

April 25, 2013

Kenworth HEV Bucket Truck

Mark Kuhn

Principal

Ricardo Strategic Consulting

Diesel

NG

EV

Diesel HEV

NG HEV

http://xlhybrids.com/hybrid-van-available-now

© Ricardo plc 2013 2 RD.12/272601.5

Contents

Scope of study

Technologies/segments

Analysis methodology

Analysis results

– Diesel vs. NG, Diesel HEV, NG HEV, EV

Conclusions / next steps

© Ricardo plc 2013 3 RD.12/272601.5

Model Summary – Included Technologies and Segments

Six technologies and 22 technology \ vehicle segment

combinations were included in the model

CV Market: Based on Project Segments

© Ricardo plc 2013 4 RD.12/272601.5

Representative vehicles were selected to characterize each

fleet segment and each technology

Baseline Diesel Vehicle Inputs – Representative Vehicles

Source: U-Haul, Kenworth of Florida, HT&T Truck Centre, Rock& Dirt, Peterbilt, Kenworth, Ford, NREL, Fleet Equipment Magazine, TRB, Calstart

Diesel HEV reference: HEV Express Cargo Van with Duramax 6.6L V8 Turbo Diesel with 260 hp, 525 lb.-ft. torque and B20-Diesel compatibility

© Ricardo plc 2013 5 RD.12/272601.5

Vehicle TCO is modeled as the PV of the sum of both CAPEX

and OPEX for that vehicle within its first ownership period

Vehicle TCO

Maintenance

Cost

Model Summary – Model Structure

Vehicle OPEX (PV over vehicle life)

Vehicle CAPEX

Vehicle

Purchase Cost

Per Vehicle

Infrastructure

Cost*

Fuel Cost

Engine

Transmission

Brakes

Emission Control

Installation

Permits

PV of

Maintenance

Fuel

Consumption Fuel Price

Purchase

Price Incentives

PV of Salvage

Proportional

Use of

Capacity

Total

Infrastructure

Cost

Vehicle Fuel

Consumption

Total Capacity

Fuel Economy

Idle Time

Driving Distance

+

+

x x

+

* Infrastructure costs assumed to be $0

for diesel

© Ricardo plc 2013 6 RD.12/272601.5

Vehicle level TCO and Payback Periods vary with each vehicle

class and duty cycle combination: NG best for Class 3

vehicles; Diesel for Class 8 trucks

Model Summary – Vehicle TCO Output

TCO Summary Table

Source: Diesel Tab

2012 2015 2020 2012 2015 2020 2012 2015 2020 2012 2015 2020 2012 2015 2020

Per Vehicle OPEX $

Diesel 39,864 41,774 46,354 91,556 95,282 105,687 156,911 158,043 168,206 163,600 171,119 192,759 251,418 250,992 263,456

Natural Gas 29,765 33,342 36,625 69,274 77,762 85,333 115,637 127,720 134,810 131,327 148,501 165,576 186,266 199,232 205,072

Electric 12,480 12,938 14,601 58,524 57,645 59,488 3,932 4,064 4,593 2,208 2,275 2,559 6,446 6,726 7,719

HEV 37,067 37,252 39,284 80,351 76,143 80,092 137,160 130,611 131,202 51,730 76,143 1,409 231,651 224,555 226,267

HEV+NG 21,985 24,040 24,863 46,073 50,188 51,734 87,443 93,363 92,800 35,689 41,024 9,601 158,496 166,720 164,210

PHEV #REF! #REF! #REF! #REF! #REF! #REF! 100,377 94,849 89,253 68,391 65,673 64,579 #REF! #REF! #REF!

Net CAPEX - Vehicle*

Diesel 29,149 30,401 32,604 53,856 56,086 60,008 58,016 60,489 64,841 133,460 138,793 148,158 90,637 95,258 102,172

Natural Gas 31,550 32,528 34,329 72,020 73,016 75,167 82,766 82,900 83,836 142,523 145,398 151,065 160,924 161,750 151,703

Electric 108,688 105,272 82,790 98,527 104,551 92,622 62,572 64,947 69,142 116,268 120,752 128,652 90,936 94,428 100,583

HEV 48,149 50,032 49,152 76,756 79,348 79,821 82,916 88,544 89,123 137,367 79,348 151,735 156,800 164,751 170,767

HEV+NG 52,924 54,485 53,127 93,056 94,238 92,641 109,666 112,896 109,963 159,267 162,367 168,543 213,537 217,478 205,636

PHEV 42,749 45,163 45,030 71,796 74,896 76,088 146,016 135,285 122,246 155,360 157,481 162,595 102,577 111,068 115,252

CAPEX - Per Vehicle Infrastructure

Diesel - - - - - - - - - - - - - - -

Natural Gas - - - - - - - - - - - - - - -

Electric 1,850 1,906 2,003 1,850 1,906 2,003 - - - - - - - - -

HEV - - - - - - - - - - - - - - -

HEV+NG - - - - - - - - - - - - - - -

PHEV - - - - - - - - - - - - - - -

TCO (dollars for year of purchase)

Diesel 69,013 72,175 78,958 145,412 151,368 165,695 214,927 218,531 233,047 297,060 309,913 340,918 342,054 346,251 365,629

Natural Gas 61,315 65,870 70,954 141,294 150,778 160,500 198,403 210,620 218,646 273,849 293,899 316,641 347,189 360,982 356,775

Electric 123,017 120,116 99,394 158,901 164,102 154,113 66,504 69,011 73,735 118,477 123,028 131,211 97,382 101,153 108,301

HEV 85,216 87,284 88,436 157,107 155,491 159,913 220,077 219,155 220,325 189,097 155,491 153,144 388,451 389,306 397,034

HEV+NG 74,910 78,526 77,990 139,129 144,425 144,375 197,109 206,259 202,764 194,956 203,391 178,144 372,033 384,197 369,847

PHEV #REF! #REF! #REF! #REF! #REF! #REF! 246,393 230,134 211,499 223,751 223,154 227,175 #REF! #REF! #REF!

Payback Period (Excluding Infrastructure)

Diesel - - - - - - - - - - - - - - -

Natural Gas 1 1 <1 9 11 7 5 7 5 2 2 1 5 6 4

Electric 23 19 10 8 9 5 <1 <1 <1 <1 <1 <1 <1 <1 <1

HEV 14 12 9 12 9 7 8 7 5 <1 <1 <1 8 7 6

HEV+NG 7 7 5 10 10 6 7 9 6 #VALUE! #VALUE! #VALUE! 6 6 4

PHEV >30 >30 >30 >30 >30 >30 15 10 5 2 2 1 #REF! #REF! #REF!

Delivery Delivery Delivery Work Truck Intercity Truck

Class 3 Class 4-6 Class 7-8 Class 6 Class 8

TCO Summary

Notes:

1. CAPEX weighted based on proportion of total capacity used by an

individual vehicle. For example if a truck used 10DGE /year of an

available 100 DGE infrastructure that cost $100, then the per

vehicle infrastructure CAPEX for that truck would be $10

2. The payback period listed in this table excludes infrastructure and

battery replacements. Other payback periods including both of

these costs can be found at the bottom of the individual

Technology Worksheets

3. All costs are in present value $ for the year stated at the column

head

Class 3

Delivery

Class 8

Intercity

TCO:

Lowest

NG lowest,

followed by

diesel and

NG+HEV

Diesel, followed

by NG HEV+NG

& HEV

Payback

Period:

Lowest

NG (~ 1 year)

followed by

HEV+NG (5-7

years), and

HEV (9-14

years)

NG (4-6 yrs),

followed by

HEV+NG (4-6

yrs) and HEV

(6-8 yrs)

OPEX:

Lowest

EV HEV+NG

CAPEX:

Lowest

Diesel Diesel

= Best in vehicle class/duty cycle

© Ricardo plc 2013 7 RD.12/272601.5

69

145

215

297

342

61

141

198

273

347

123

159

85

157

220

388

75

139

197

372

246 223

Diesel best: Class 8; NG best: Class 3 delivery; NG+HEV best:

Class 4-6 & 7-8 delivery; PHEV best: Class 6 work truck

TCO by Segment and Technology

Source: Ricardo Fleet TCO Model

TCO Model Output – Segment, Technology and Year Comparison

Diesel Natural Gas Electric Vehicle

72

151

218

310

346

66

151

211

293

361

120

164

87

155

219

389

78

144

206

384

230 223

79

166

233

340 365

71

161

219

317

356

99

154

88

160

220

397

79

144

202

369

215 227

Class 3 Delivery Class 4-6 Delivery

Class 7-8 Delivery

Class 6 Work Truck

Class 8 Intercity

2012

2015

2020

Key Takeaways

Class 3: NG and diesel are

lowest TCO. – NG +HEV is slightly higher than

diesel vehicle

– EV is consistently the highest

driven by large CAPEX.

Relatively small range for

TCO except for Class 6 work

truck – Driven by high initial vehicle price

(relatively smaller percent

change for the addition of new

technologies)

– Majority idle fuel usage

– Longest period of ownership

Class 8 Intercity has very low

relative variation in TCO – Driven by short ownership period

assumption

– Mid range annual mileage

assumption

$ 1

,000s

$ 1

,000s

$ 1

,000s

6 year TCO

12 year TCO 12 year TCO 15 year TCO

5 year TCO

HEV NG-HEV PHEV Die

se

l

Natu

ral G

as

Na

tura

l G

as

NG

-HE

V

PH

EV

Natu

ral G

as

NG

-HE

V

NG

-HE

V

PH

EV

NG

Natu

ral G

as

NG

-HE

V

NG

-HE

V

PH

EV

Die

se

l

Best-in-sector shown in green frame

© Ricardo plc 2013 8 RD.12/272601.5

Class 3: For all but diesel, CAPEX exceeds OPEX. For highest

cost vehicles, CAPEX is 1.5-9X higher than OPEX

Class 3 Delivery TCO Net CAPEX and OPEX Contributors

29,149 31,550

108,688

48,149 52,924

30,400 32,528

119,860

50,030 54,485

32,604 34,328

108,152

49,152 53,127

1,850

1,906

2,003

39,134 27,581

12,480

31,067 21,985

55,220

30,533

12,938

37,252 24,040

61,011

33,420

14,601

39,294 24,863

68,283

59,131

123,018

79,216 74,909

85,620

63,061

134,704

87,282

78,525

93,615

67,748

124,756

88,446

77,990

Diesel Natural Gas

Electric HEV NG+HEV Diesel Natural Gas

Electric HEV NG+HEV Diesel Natural Gas

Electric HEV NG+HEV


Example TCO Model Output – Class 3 Delivery

Diesel Vehicle Net CAPEX

Diesel OPEX

CNG Vehicle Net CAPEX

CNG OPEX

EV Vehicle Net CAPEX

EV OPEX

EV Infrastructure CAPEX

2012 2015 2020

Key Takeaways

Lowest OPEX by far is with

EV, but highest CAPEX

Lowest OPEX+CAPEX is

CNG, followed by diesel

Shorter ownership periods

(6 years vs. 12-15 for other

classes) lead to higher %

contribution of Net CAPEX

to overall TCO.

Start-stop drive cycle

favors electric vehicles in

operating costs, but the

high initial price

significantly affects the

TCO

HEV Vehicle Net CAPEX

HEV OPEX

NG+HEV Vehicle Net CAPEX

NG+HEV OPEX

OPEX

CAPEX

© Ricardo plc 2013 9 RD.12/272601.5

$50,000

$55,000

$60,000

$65,000

$70,000

$75,000

$80,000

$85,000

$90,000

$95,000

$100,000

2012 2015 2020 CNG - Public Station CNG - Private Station

CNG - In house 50 vehicles CNG - In house 100 vehicles

CNG - In house 300 vehicles Nominal Diesel

High Diesel Low Diesel

Small fleets see little financial benefit from installing their own

CNG infrastructure but may have few other options available

Class 3 Delivery TCO: Multiple Pricing Cases

TCO Comparison – Sensitivity to Assumptions C

las

s 3

De

live

ry V

eh

icle

TC

O

Key Takeaways

Use of private fueling stations

leads to savings over public

fueling stations

Small and medium fleets (100

vehicle or less) see no financial

benefit from installing on-site

infrastructure

Fleets >300 vehicles will justify

infrastructure investment even

with low diesel fuel costs

50 vehicle fleets can only justify

infrastructure investment if

diesel fuel cost is high

The financial benefit of natural

gas class 3 delivery vehicles

diminishes in areas where there

is a lack of public and private

refueling infrastructure

Assumptions:

•Phoenix Urban Drive Cycle

•No Natural Gas Incentives

•No additional maintenance facility upgrades

•Land costs not included in infrastructure costs Source: Ricardo Fleet TCO Model

High Diesel

$6.43/gal

Nominal Diesel

$4.67/gal

Low Diesel

$2.94/gal

50 v

ehic

les

100 v

ehic

les

300 v

ehic

les

50 v

ehic

les

100 v

ehic

les

300 v

ehic

les

50 v

ehic

les

100 v

ehic

les

300 v

ehic

les

High Diesel

$4.37/gal

Nominal Diesel

$3.90/gal

Low Diesel

$3.01/gal

© Ricardo plc 2013 10 RD.12/272601.5

Class 8: OPEX >> CAPEX for diesel, OPEX is smaller % of total

costs for LNG. LNG expected to outperform diesel in out years

as diesel $ continues to rise, and technology cost matures

2 scenarios for LNG Class 8 Intercity are compared to a diesel baseline

$90,637

$135,924 $160,924

$95,258

$137,749 $161,750

$102,172

$132,132 $151,703

$251,418 $146,136

$191,808

$250,992 $140,978

$183,785

$263,456

$133,728

$172,153

$342,055

$282,060

$352,732 $346,250

$278,727

$345,535

$365,628

$265,860

$323,856

Diesel NG Case1 NG Case2 Diesel NG Case1 NG Case2 Diesel NG Case1 NG Case2


Example TCO Model Output – Sensitivity to Assumptions

Diesel Vehicle Net CAPEX Diesel OPEX LNG Vehicle Net CAPEX LNG OPEX

2012 2015 2020

Case Descriptions / Key

Takeaways

Natural Gas Case 1:

– In-house fuel cost

– 120 DGE tank (~300 mile

range)

Natural Gas Case 2:

– Public Pump fuel Price

– 240 DGE tank (~600 mile

range)

2020 Cost advantage of NG

Case #1 due to lower pump

price than in-house price,

(~$35K) and lower cost of

smaller fuel tank (~$25K)

Downward cost trend of LNG

due to increasing forecast of

diesel price, and decreasing

cost of LNG technology as

technology matures and

incremental cost penalty

decreases

OPEX

CAPEX

© Ricardo plc 2013 11 RD.12/272601.5

$200,000

$250,000

$300,000

$350,000

$400,000

$450,000

$500,000

2012 2015 2020 LNG - Public Station LNG - Private Station

LNG - In house 50 vehicles LNG - In house 100 vehicles

LNG - In house 300 vehicles Nominal Diesel

High Diesel Low Diesel

Sensitivity of infrastructure: high fuel consumption of Class 8

Intercity trucks makes on-site infrastructure more appealing

Class 8 Intercity TCO: LNG fueling and infrastructure case evaluation

Example TCO Model Output – Sensitivity to Assumptions C

las

s 8

In

terc

ity V

eh

icle

TC

O

Key Takeaways

High fuel consumption of Class

8 Intercity trucks makes on-site

infrastructure more appealing

than public or private fueling for

fleets as small as 50 trucks

Dependant on routes and

distances travelled, this may

only be true if a single hub in

the shipping network has at

least 50 vehicles:

– This scenario only includes

one filling station

– Intercity trucks may not be

able to return to that station

at the end of the day

Additional Assumptions:

•No Natural Gas Incentives

•No additional maintenance facility upgrades

•Land costs not included in infrastructure costs

•One LNG station per fleet

•LNG transported 300 miles or less Source: Ricardo Fleet TCO Model

High Diesel

$6.43/gal

Nominal Diesel

$4.67/gal

Low Diesel

$2.94/gal

High Diesel

$4.37/gal

Nominal Diesel

$3.90/gal

Low Diesel

$3.01/gal

50 v

ehic

les

100 v

ehic

les

300 v

ehic

les

50 v

ehic

les

100 v

ehic

les

300 v

ehic

les

50 v

ehic

les

100 v

ehic

les

300 v

ehic

les

© Ricardo plc 2013 12 RD.12/272601.5

Operating cost variables are effected by brake life, battery life,

oil change intervals, filter replacements and oil cost Key observations:

1. Hybrid systems significantly reduce brake replacement frequency, significantly reducing maintenance costs for high

mileage duty cycles. HEV brake maintenance savings more than offsets battery replacement costs for vehicles kept

longer than the estimated 8 year battery life

2. NG: shorter oil change intervals, tank inspections, and more frequent filter replacements lead to slightly higher

maintenance costs for natural gas vehicles. SI engines also require that natural gas engine oil be used.

3. NG HEV: maintenance costs offer significant reductions over conventional diesel vehicles

Source: Peterbilt Hybrid System Maintenance Manual, NREL/TP-5400-53503, NREL Merit Review - Coca Cola, NREL/TP-540-44314, NREL/CR-540-42534

OPEX: Maintenance

Notes: 1. This study does not take into account increased diagnostic time involved in introducing a new technology into your shop. In several NREL hybrid fleet studies, the troubleshooting of problems with HEV systems offset maintenance cost advantages. 2. Battery replacement PV is used for all model calculations. Annualized battery replacement is used only for illustrative comparisons between baseline and HEV maintenance.

3. New technology troubleshooting and low volume part scarcity potential with this technology are not considered in the model 4. Additional diagnostic costs associated with the repairs to new technologies are not included



HEV Maintenance and Overhead 693$ 1,234$ 854$ #VALUE! 2,598$

HEV Brake Maintenance 161$ 250$ 282$ -$ 589$

HEV Other Maintenance and Overhead 533$ 743$ 494$ #VALUE! 2,010$

HEV Battery Replacement (annualized) -$ 241$ 79$ #VALUE! -$

HEV Battery Replacement (PV) -$ 2,896$ 945$ #VALUE! -$

Diesel Maintenance and Overhead 1,255$ 1,877$ 1,949$ 3,425$ 4,360$

Diesel Brake Maintenance 804$ 1,248$ 1,472$ 2,944$ 2,944$

Diesel Other Maintenance and Overhead 451$ 629$ 477$ 481$ 1,416$



Natural Gas Maintenance and Overhead 1,748$ 2,155$ 2,606$ 3,653$ 5,831$

Diesel Maintenance and Overhead 1,500$ 1,877$ 2,181$ 3,425$ 4,360$



NG-HEV Maintenance and Overhead 779$ 1,318$ 1,423$ -$ 2,532$

Baseline Diesel Maintenance and Overhead 1,255$ 1,877$ 1,949$ 3,425$ 4,360$

© Ricardo plc 2013 13 RD.12/272601.5

Conclusions

Commercial vehicles were modeled with 6 powertrain technology configurations, including diesel as the

baseline powertrain, and 22 combinations of powertrain & vehicle/duty cycle

TCO:

– TCO can be reduced by 14% or increase by as much as 80% depending on technology, duty cycle,

infrastructure and fuel costs

– Operating cost variation is effected by brake life, battery life, oil change intervals, filter replacements

and oil cost

Payback period:

– Payback period for introducing new technology ranges from 1 to 23 years

• 1 year: Class 3 delivery NG, and Class 6 work truck NG and PHEV

• 23 years: Class 3 delivery EV, driven by CAPEX: battery pack, motor and power electronics,

charging infrastructure and low volumes associated with new technology

– Payback period is sensitive to infrastructure requirements paced by fleet size, the rate of diesel fuel

cost increase and desired vehicle range (battery or tank size)

Technology choice for lowest TCO:

– Diesel best: Class 8

– NG best: Class 3 delivery

Next steps: expand to more technologies, and more applications such as off highway, agriculture,

mining, marine, power generation…

– NG+HEV best: Class 4-6 delivery & 7-8 delivery

– PHEV best: Class 6 work truck

www.ricardo.com

© Ricardo plc 2013

Total Cost of Ownership: Economics of

Emerging Fleet Technologies

Thank you!

Links: American Gas Association Natural Gas Fleet Savings Calculator

http://www.aga.org/our-issues/natural-gas-vehicles/Pages/Natural-Gas-Fleet-Savings-Calculator.aspx

Or Google: Ricardo Fleet Savings Calculator

Ricardo Strategic Consulting • Ricardo Inc.

Detroit Technology Campus, 40000 Ricardo Drive

Van Buren Twp., Michigan 48111 USA

Christopher Yee Manager

Telephone: +1 734.306.5055

Facsimile: +1 734.397.6677

[email protected]

Ricardo Strategic Consulting • Ricardo Inc.

Detroit Technology Campus, 40000 Ricardo Drive

Van Buren Twp., Michigan 48111 USA

Mark S. Kuhn, P.E. Principal

[email protected]

Mobile: +1 248 819 5744

Recption: +1 734 397 6666

Facsimile: +1 734 397 6677

www.ricardo.com
















Ricardo total cost of ownership-economics of emerging fleet technologies

Technology

Transcript of Ricardo total cost of ownership-economics of emerging fleet technologies