For Mack Trucks, the 18-wheeled big rig future is still going to be EV

Mack Trucks, founded in Brooklyn, New York, in 1900, is renowned for its 18-wheelers, diesel-powered big rigs with a trademark bulldog mounted on the hood. In 2021, that iconic ornament debuted in copper, rather than its usual gold hue, signifying the venerable manufacturer’s first foray into battery-electric vehicles. Appropriately, the LR Electric is a heavy-duty garbage truck, engineered to pick up and dispose of all types of refuse, without emitting any noxious greenhouse gases.

Mack has since delivered around 35 LRe’s to a growing number of cities — from New York City to Miami, Florida — at an adoption rate that Jonathan Randall, president of Mack Trucks North America, described as slow but steady.

“Cities are not taking delivery en masse,” he said, “but testing the technology to see how it works.”

Now headquartered in Greensboro, North Carolina, Mack is part of Sweden’s Volvo Group and its Volvo Trucks unit, which produces is own brand of EVs for U.S. and overseas markets. Volvo Group’s 2023 earnings report showed that Mack took 124 new orders for its BEVs last year, up from 44 in 2022, a 200% increase.

There’s no doubt that EVs work, and not just Mack’s, which also includes a medium-duty model, the MD Electric, introduced last March. Virtually every automotive manufacturer — of cars and trucks, big and small — produces a mix of fully electric models, plug-in hybrids and gas-electric hybrids. Many OEMs have set goals to sell only zero-emissions vehicles (ZEVs) by 2050, aligning with the 2015 Paris Climate agreement’s wide-ranging net-zero targets to address global climate change. The transportation sector is the largest source of greenhouse gas emissions in the U.S., accounting for 29% of total U.S. emissions in 2021, according to the Environmental Protection Agency’s latest statistics.

The multibillion-dollar question about EV buying

Beyond the viability of technologies, however, the multibillion-dollar question is if, and when, customers will buy EVs as the industry transitions away from internal-combustion engines. Purchase-making decisions are distinct for consumer and commercial markets, a difference reflected in last year’s EV sales results within both sectors and outlooks for future growth.

Although U.S. consumers bought or leased a record 1.2 million EVs in 2023, according to Kelley Blue Book — representing year-over-year growth of 46% and raising the total market share of EVs to 7.6% from 5.9% in 2022 — by year’s end the pace of growth had slowed. EV sales increased year over year by 40% in the fourth quarter, yet were down from 49% in the third quarter. Cox expects this year’s EV sales to reach 1.5 million, about 36% higher than last year. In other words, the EV market in the U.S. is still growing, just not as fast.

Auto makers, from Ford to Tesla to GM have been cutting prices on EVs to spur demand, cutting back on production targets for new EV models and transferring jobs back to traditional engine models, and sounding more uncertain about the aggressive timelines they initially set for the EV transition, while talking up hybrids more.

EDF observed a big increase in electric vehicle truck deployments between 2020 and 2023. Eighty EV truck deployments were cataloged in 2020, and those deployments jumped to 1,948 in 2022. Combined with more than 10,000 deployments in 2023, the list tracked upwards of 12,894 medium- and heavy-duty electric trucks put into service across the United States in the past four years. This increase does include Class 2 EVs, like the electric vans that Amazon and other delivery services are utilizing in growing numbers.

Sales of all medium- and heavy-duty trucks — which comprise only about 5% of vehicles on the road — totaled 507,277 in 2023, up 7.6% from 2022, according to the American Truck Dealers Association. The association does not break out the number of EVs sold.

“It’s a different dynamic when you talk about business-to-business versus business-to-consumer [markets] and the adoption of this technology,” Randall said. “I know the B2C has backed off, from the standpoint of demand. We really haven’t seen the interest wane. Of course, we haven’t done the volumes of EVs that the automakers have, but the interest remains pretty robust for us, and it’s only going to build.”

ACT Research, a trucking industry analyst firm, shares Randall’s optimism, if a bit tempered. In September, the firm released a study estimating that the adoption rates for zero-emission and decarbonization vehicles will reach 25% by 2030 and 50% by 2040. The study forecast a relatively low adoption rate from this year through 2026, though, “reflecting the fact that BEV sales of commercial vehicles are still in their early years,” said Ann Rundle, vice president of electrification and autonomy. This begins to change in 2027, she said, in part due to upcoming changes in federal and state emissions regulations that may result in higher prices of diesel-powered trucks.

Rundle also echoed Randall’s distinction on buyers. Whereas the current pullback in consumer demand for EVs is attributed mostly to still-too-high sticker prices vs. ICE vehicles and charging anxiety — angst over driving range and access to charging stations — commercial buyers calculate the total cost of ownership (TCO). “That is one of the biggest criteria,” Rundle said. “It’s a business asset. What is my return on investment?”

The upfront cost of an EV truck is still comparatively higher than an ICE model’s, so corporate fleet owners, private hauling companies and individual truck operators have to gauge how quickly an EV’s lower operating costs will reap a payback.

“You can reduce quite significantly the aftermarket needs, because you have fewer moving parts in an EV,” said Mattias Holmberg, a Sweden-based analyst at DNB Markets. “While there still will be routine maintenance costs for an EV, like brakes and tires, they won’t be as high as repairing or replacing pistons, valves and other expensive components that comprise an ICE, as well as a multi-gear transmission, which will help square the cost circle.

But to date, he said, when an owner looks at TCO, which includes aftermarket spare parts and maintenance, drivers’ wages, fuel consumption, insurance and so on, “that break-even point skews away from the big upfront investment.”

Two critical factors in the TCO equation, Holmberg said, are battery technology and charging infrastructure, issues that every EV manufacturer is confronting. The battery is still the largest expense of an EV, so lowering that cost, as well as the energy capacity of the battery, is a primary focus of truck OEMs’ research and development investments.

“We need to have more energy-dense and cheaper batteries for this to be viable,” Holmberg said. “Looking at the development curve where battery costs are heading, this will come in due time. I would say we are still a few years away from reaching that break-even point where it makes fully economical sense to make the switch.”

A study last year by the International Council on Clean Transportation and Energy Innovation found that by 2030, the TCO of battery-electric long-haul trucks will likely be lower than that of their diesel counterparts.   

Mack currently outsources its batteries, but moves by its parent company might cut out those middlemen. In 2022, Volvo Group announced plans to build a large-scale battery factory in Sweden, expected to reach large-scale production by 2030. Closer to home, in early February, Volvo Group completed its acquisition of Proterra, a U.S. battery and electric bus manufacturer that declared Chapter 11 bankruptcy last summer, for $210 million. The deal includes a development center for battery modules and packs in California and an assembly factory in South Carolina.

As with the consumer EV market, where Tesla stands to reap billions from its early investment in nationwide charging, building out an adequate and reliable nationwide battery charging infrastructure is a challenge facing the trucking industry. It’s also a major component among the federal and state governments’ to drive the transition to commercial EVs, especially heavy-duty semis that travel long distances.

A number of startups, including Freewire, TeraWatt Infrastructure, WattEV and ChargePoint, are building charging stations throughout the country. In January, Volvo Group North America, Daimler Truck and Navistar — which collectively represent about 70% of the medium- and heavy-duty truck market in the U.S. — formed Powering America’s Commercial Transportation, a coalition to promote charging infrastructure.

The Biden administration’s National Electric Vehicle Infrastructure Formula Program, established by the Bipartisan Infrastructure Law, makes $5 billion available over five years to help build a charging network across the country. The Inflation Reduction Act also provides tax credits to businesses for charging equipment.

While the trucking industry and government entities work toward making long-distance EV transportation more cost-effective, the situation for short-distance routes is more viable. “Commercial vehicles operating on one shift, driving less than 100 miles a day and returning to a local hub for charging are great for maximizing the strengths of a BEV,” Rundle said, which explains why Amazon, Walmart, FedEx and UPS, as well as short-haul private shippers, are electrifying their fleets. Marine ports and terminals have seen an uptick in drayage EVs that transport shipping containers to local destinations.

Mack’s two EVs fit into that short-haul scenario, and the company’s e-mobility strategy. “The MDe can carry light loads, operate in urban environments and return home to a depot every night,” Randall said. Mack had just a handful of MDe’s on the road as of mid February, he said, “and we have a good backlog to deliver in the first half of this year.”

Mack manufactures both ICE and electric MDs at its facility in Roanoke, Virginia, and just announced that it’s investing $14.5 million to expand the facility. Randall hinted that Mack will look toward making a heavy-duty EV for regional hauling, including drayage. “We’re in the markets where we think it makes the most sense and there’s maintained and continued interest in adoption,” he said.

Mack Trucks’ network of nearly 420 dealers plays an integral part in that adoption. About 80 of them have been or are in the process of becoming EV-certified, which requires meeting Mack’s safety, infrastructure, charging and tooling requirements.

To support dealers and address customers’ hesitation in adopting EVs, the company offers a fleet management program, Turnkey Solutions, that covers all aspects of developing a charging infrastructure. Mack also offers ElectriFi Subscription, a leasing program, allowing customers to pay as they go for miles driven with chassis and body, charging, applicable incentives, physical damage insurance and maintenance costs bundled into monthly payments.

“We’re going to need the entire dealer network [to be EV-certified] as e-mobility grows as a percentage of total sales,” Randall said, anticipating the day when every Mack truck has a copper-colored bulldog atop its hood.