TCO parity between battery electric trucks and diesel trucks in India

Current landscape and the importance of TCO

Medium- and heavy-duty trucks are the backbone of India’s economy, hauling about 70% of the nation’s freight. However, these same trucks are major polluters, responsible for 44% of the CO2 emissions from road transport, even though they make up just 3% of the vehicle fleet. The report emphasises that switching to BETs is vital for slashing these emissions and helping India meet its commitments under the Paris Agreement, including the ambitious goal of net-zero emissions by 2070.

The TCO, which takes into account everything from upfront costs to fuel, maintenance, and other operational expenses, is a key factor in determining how economically viable BETs are. Although BETs currently come with a higher price tag than diesel trucks, the report predicts that TCO parity could be reached within the next five years, thanks to declining battery costs and gains in fuel efficiency.

Upfront costs and future projections

As of 2023, buying a BET will set you back 4–6 times more than purchasing a diesel truck. This steep price difference mainly comes down to the high cost of batteries, which make up a big chunk of what you pay for a BET. But the report forecasts a dramatic drop in battery prices—up to 65% by 2040—due to advances in technology and ramped-up production. This decrease would bring the upfront cost of BETs down to about 1,2–1,4 times that of diesel trucks for most segments by 2040.

However, for the heavier 42-tonne trucks, the cost gap is expected to stay wider, with BETs predicted to cost twice as much as their diesel counterparts by 2040. Still, these projections indicate that the economic case for BETs is getting stronger, especially for lighter truck segments where the cost difference is closing faster.

Achieving TCO parity

According to the ICCT, BETs could achieve TCO parity with diesel trucks as early as 2027 for applications involving high-volume, low-weight cargo. This timeline could be sped up with the right combination of strict fuel economy regulations and targeted incentives. For example, introducing fuel efficiency standards that push up the upfront cost of diesel trucks could make BETs more competitive. On top of that, incentives like purchase subsidies, interest rate discounts, and road tax waivers could help shrink the TCO gap between BETs and diesel trucks even further.

In scenarios where these incentives are in play, the report finds that BETs in the 12-tonne, 16-tonne, and 28-tonne categories could achieve TCO parity with diesel trucks as soon as the 2023 model year. Even without these incentives, TCO parity is expected across all truck segments within this decade.

Operational cost advantages

One major upside of BETs is their lower operational costs. BETs are about 65% more fuel-efficient than diesel trucks, which translates to significant energy cost savings over the vehicle’s lifetime. These savings become even more noticeable with longer daily driving distances, where the fuel cost advantages of BETs can more than offset their higher upfront costs.

Additionally, as electric vehicle (EV) charging infrastructure expands and becomes more efficient, the operational cost benefits of BETs will only grow. The report highlights the importance of optimising battery sizes to strike a balance between upfront costs and operational efficiency, especially for long-haul trips where on-the-go charging might be necessary.

Conclusion

Switching to battery electric trucks in India isn’t just good for the environment—it’s also an economic opportunity. The ICCT report makes it clear that with the right mix of policy support and technological advances, BETs could become just as cost-competitive as diesel trucks within this decade. Reaching TCO parity will be a key milestone in decarbonising India’s freight sector, reducing the country’s dependence on fossil fuels, and improving air quality in its cities.

As India continues to pour resources into electrifying its transport sector, the insights from this report provide a roadmap for policymakers and industry leaders alike. Supporting the adoption of BETs will be crucial in ensuring a sustainable and economically viable future for road transport in India.

Source: The ICCT