Episode 153: The Truth about EV Costs: The Good, The Bad, and the Ugly, Pt1

This is the Fleet Success Show dedicated to helping you and your fleet succeed using the experience of fleet professionals and Hall of Fame fleet legends. The show that explores how the pillars of stakeholder satisfaction, intentional culture, resource efficiency, and risk management all combine to lead your fleet to success. We're glad you're here. Now let's get into the show. Hey everybody, welcome back for another episode of the Fleet Success Show with your hosts, as always, Josh Turley, Mark Ken, Nice to see you again.

Nice to see you.

Quick intro for our new-time listeners. And trust me, this is going to be a doozy of an episode. You're going to want to know why on earth, how, why do we listen to these guys? Josh Turley, I've been here at RTA for 20 years working with fleet management systems technology. Got my bachelor's and master's and all that fun paper that you go pay lots of money for. Not that it's totally worthless, but definitely got more out of the books I read. So huge into leadership, culture, and fleet and helping fleets succeed. And Mark, you're a former fleet manager, fleet consultant extraordinaire. Been in the industry how long?

Not quite 30 years.

Okay. So you've been around.

I've been around.

You've seen some things.

I think so.

All right. And as a consultant, you've seen, you know, hundreds of—

Yes, that's deeply exposure. Yeah.

Especially as an analyst like you are intimately familiar.

I get to dig into the to the data.

Like a doctor for the fleet. They know all the things.

Yeah.

So a few, gosh, a few months ago, we released a Truth About EVs.

Yeah.

And a part 2 to that. The part 2 was not nearly as popular as I thought it should have been.

No, it's okay.

It's okay. But just kind of dispelling some of the myths that we get a lot from the EV folks.

Right.

Right. And now I'm going to just start right here in the middle of the episode. And flat out say that Mark and I and RTA in general, we are not anti-EV at all. In fact, we really love EV.

I own one.

You own one. I will own one one day. I know that.

Our VP of Sales owns one.

They're amazing. Yeah, I love what EV can do and I love what the capabilities are. Mm-hmm. But oftentimes we hear people as they talk about EVs and just how wonderful they are, is, you know, how much money you save on fuel, how much money you save on maintenance and repair, and how it's a no-brainer cost-wise that you should— everybody should just switch to an EV.

Right.

And then economics aside, we talk about, you know, it's a no-brainer for the environment that we should switch to EV, that it's a no-brainer every vehicle should be an EV.

Right.

And I know some people think that, oh no, not everybody, every vehicle should be an EV. We pragmatic agree with that.

Right.

If anything, I'm going to say that we're not anti-EV, but we're not outrageously pro-EV. I would say we're pragmatic.

Yeah.

But we really like to show the data.

Yeah.

We really like to show, you know, the data around EVs. Let the data tell you the story and then you can make an informed decision, not one based on tribalism, politics, or whatever thing is floating around today.

Yeah.

Right. It's the, the EV hysteria, if we want to call it that.

Exactly.

So as we go through, you know, we talked about, you know, a lot of the myths and things like that. Obviously, you know, some of our colleagues have posted online.

Yeah.

And I know this is going to piss some people off.

Yeah. And we're sorry in advance for that. We're not trying to piss anybody off.

We aren't. We just want you to be educated.

Right.

And have these decisions when you get faced with an EV mandate and faced with, you know, the challenges that we're going through right now.

Right.

That you can go in eyes wide open.

Eyes wide open.

Tell the full story.

That's it.

And then make an informed decision fully.

Right.

Right. I will say we're probably— I'm not going to say we're anti-car, we're anti-ACF. But for those who don't know, in the California side of things, there is a mandate. We need to switch every conventionally fueled vehicle to EV by the year 2030. Every vehicle. Class A, you can apply for exceptions, but— Exactly. But it doesn't matter. We're pushing to have every vehicle replaced by an EV.

Right.

And our pragmatic approach is that's a lot of money. It's very expensive. Not a lot of people know how expensive that is.

Right.

And it's not necessarily pragmatic because EV isn't the right tool in every case.

Right.

Right. And so that's kind of our approach to it. That's our overall philosophy. If you got a problem with that, you can email me directly, podcast@rtafleet.com. That goes straight into my inbox. I will see that. But that's kind of our approach to it is It's not the panacea to the entire thing.

Yeah.

There's a right case for a right time to use CFV, to use hybrid, which is actually our favorite mode. And then versus battery electric vehicles as well.

Yeah.

Today though, we've been talking about this one for a while.

Yeah.

Today we wanted to get into the raw numbers and the economics behind switching to EV and dispel some of the myths around how much money you can save by switching to EV. In fuel cost, M&R costs, etc.

Right.

Exactly. You want to set this up a little bit?

Yeah. I mean, look, and again, I'll just quickly dovetail what you're going to say. This is the way I like to summarize it. Yeah, we, we don't believe that EVs are the messiah and we don't believe EVs are the devil incarnate. Right. And usually people seem to fall on one of those two sides. Right. And to your point, eyes wide open is the key. Right. It is. I would actually say we are pro-EV, which is pro-EV in the right circumstances. Right. And there are many good circumstances.

So we're just not blanket EV.

We're just not blanket EV.

Yeah. Like, and it's not for everything and for everyone in all cases. Like, it's got its place.

Right.

And its place is broader than people like to think.

That's true.

And it does have— it's going to have an impact. And the future is coming.

Yeah. If you think EVs are going to just die like a fad, you're out of your mind. Yeah. Right? No. Well, I mean, and I don't want to insult anybody, but just you're probably wrong. Let's say it a little nicer.

But yeah, maybe there were—

Maybe, maybe. Yeah, that might be true. Right?

As my good friend Vision says in Avengers, right? I was born yesterday. Right.

Yeah.

Sometimes that happens.

Yeah, exactly. And we also totally recognize that technology changes. Like, we're in the technology world. Technology changes at a really fast pace in often cases. And certainly, I anticipate EVs to be a better option as technology changes grow. Right.

I could totally understand that, especially in cases that we saw the power grid issues.

That's a major issue.

It's a major one. And it will come. Right, right. I mean, it took forever for, you know, the gasoline infrastructure to get put into place. You know, the same thing will happen with EVs. It's going to take a major investment, though.

Right.

So it's not just magic. It's going to get better as we get more power available. Cleaner power, right? Which, you know, we'll talk about here in a second. And it's going to get better as the battery technology itself improves, either through manufacturing costs so that the EVs get cheaper, right? Or through charging time so that it's faster to charge up. It's not a 20 or 30-minute charge now. It's a 5-minute, which is akin to a gas station fill-up. Right, right.

And I know this is the gorilla in the room and we're not going to dig into this today. But, you know, if we're, if we're being honest, it's also going to get better for the environment. And what I mean by that is The thing that we don't talk about today is, you know, total life emissions. People don't like to talk about that. It's always tailpipe emissions, which I understand. And there's a benefit to reducing tailpipe emissions, to be clear.

And we're going to talk about that.

And we're going to talk about that. Right. But, you know, the truth is, is there's a lot of work to do on exactly how we mine for the materials, how we build these things to hopefully try to improve, you know, in those steps, which will make the total life of EVs more and more viable and better and better. Right. And, you know, again, if you do want to talk about that stuff and we're being honest today, it may not actually be the best option. And again, to your point about variables. Yeah, listen, hey, Vermont, go EV, 97% renewable energy. Like, yeah, it's, it's going to be a much better argument there in most cases than in a lot of other places. Right.

I was just reading in Massachusetts, they did a study and this study was pro-EV study. Found that EV owners on average saved $650 a year by owning an EV versus a CFE.

Right.

And they're like, think about all the, you know, the greenhouse gases that we're eliminating by switching to this and the money we're saving.

Right.

But then you look at the dirty secret, which is that only 12% of Massachusetts energy comes from renewable sources. Now, thankfully, saving grace is this: another 25% comes from nuclear. Right. 54%, though, comes from natural gas.

Right.

So when we talk about shifting tailpipe emissions, and we'll probably say this again later in the slides, but when we talk about reducing tailpipe emissions, all you're really doing is shifting the emissions from your tailpipe to somewhere else.

Right.

Which I've driven around California. Yeah. Smog is terrible. Yeah, I think it's a decent idea.

It's a good thing for—

I'm just not going to pollute this. We're going to pollute this over here.

Right. Exactly.

But make that eyes wide open.

Yeah, exactly. And again, we do reduce emissions, right? Like Natural gas is cleaner than gasoline.

Yeah.

And diesel or fuel or oil. Yeah, exactly. So, so again, we want to be clear. We're not— we just want— we just want a down-the-middle approach. And we actually— I'm going to go a step further and say, go for it. I think that as fleet management professionals, I think we probably have a moral obligation to be down the middle on this, right?

Like for each, right?

You know, if, if we're talking about government fleets, You know, your job is to take care of your citizens. It's not to make this official happy or someone else happy. And again, I get you got to, you know, you got to do what you got to do to feed your children and all that jazz. But, you know, your job is to actually tell the truth to the, to the community and to the public. It's to tell the good, the bad, and the ugly. Right. So I think you have an obligation to have this down-the-middle approach. It can't be— you can't make EVs, you know, your religion. And again, you can't make your EVs your crusade, right? Like, neither is correct. And even on the corporate side, you know, again, we talked in other podcasts how we feel about the fleet industry and, you know, it literally makes the world go round, right? And so again, if that's true, which I think most people can accept as being fairly reasonable, well then if you've— even in the corporate side, I think again, you probably have a moral obligation to have some honesty. Isn't that Stuart?

And we talked about one of the pillars of fleet success being stakeholder satisfaction, which really does deal with making sure that you're making the best decisions for your stakeholders, which includes the communities that you share. Right, right. So as a corporate, you have to be a good corporate citizen.

Great point. Yeah.

You know, and protecting the health and wealth of your shareholders and the stakeholders, which means your communities at large.

Right.

As is a mandate. Right. It's imperative.

Exactly.

We like to call that conscious capitalism. In the words of John Mackey.

Yeah, that's a— and it's a great idea. And so again, You know, there's a lot of value here. You certainly can help the environment. There are certainly a lot of use cases. We'll dig into it. But again, let's say, you know, like you said, let's say the evangelists out there, the EV evangelists maybe is a way to say it, where, you know, they'll tell you that they can convert every vehicle in your fleet to EV. Truth of the matter is for most fleets, that's just not the case yet. Maybe it will be one day. It's not the case today. And we can get into the reasons for that.

But— and I would say to, you know, for those of you who are more like us, you know, kind of down the middle, pragmatic, let the data guide you, you know, looking with eyes wide open, thinking critically. That's a difficult skill that they don't teach people much of anymore. And we're not really willing to do that much. Right. Especially look at the political landscape. Yeah, it's a tough, hard time thinking critically about their positions. Because everything becomes about identity politics and identity issues, right? And when we talk about EV, I know when I saw this, when our colleague Scott posted on LinkedIn, man, you would have thought that you called somebody's mama fat, right? Right. It is just— it's a personal attack against their being. And I think that's the point where we've crossed the line, right? So what we're hoping to do today is like, hey, let's take a step back from the emotion. Let's take a step back from the tribalism and the, you know, evangelist warfare. That's going on in the EV landscape again. And we see this on the anti side as well.

Yeah, exactly. Exactly. Yes.

You know, EVs are the devil and it's just, you know, green hippie stuff trying to shove it down my throat.

Right.

It's, you know, California liberal, whatever.

That's equal level of nonsense.

It's total crap. And so we're trying to come right down the middle here and just be like, look, there is a story to tell here. Can we have a civil discourse and have a conversation about this without it turning into, you know, political nonsense and tribalism?

Right.

That's what we're hoping for.

Amen. So let's see how it goes.

Yeah. And now this, this presentation, this is kind of an excerpt. You just recently gave this presentation to several fleets in California, right, with the Clean Cities Coalition out there. So as we went through, you know, we're studying all this data and one of the first things that pops out when we talk about the economics of an EV, the most expensive piece of any asset is the purchase.

Always.

And that doesn't matter if it's conventionally fueled or EV.

Makes no difference.

It's always the most expensive piece of the asset is acquiring it.

Right.

But for EVs, it's not a great story.

It's not.

Because what you look at is when we think about, you know, ORCA models and LCAs is we're constantly looking at depreciation curves, right? Which means you're starting purchase price. What's the worth of that vehicle over time? And then how much can you remarket it for? And when it's time to dispose of that asset, right?

Whether that's a 5-year, 7-year, 10-year, you know, and to be clear, folks, that's your true— that's, that's a— let's pause on that simply because it's a concept often missed in fleet, right? It's not what you paid, it's what you paid minus what you sell it for.

Yes.

Right.

That's your true capital.

That's your true capital cost. Right. Please continue.

And so what we found as we studied all these assets was that the true capital cost of like-for-like similar models EV versus conventional-fueled, EVs drop their value way faster and they have a higher starting point.

Right.

Now, here's the silver lining is you can sell an EV for more than you sell a CFE for. A used EV will go higher than a used CFE.

Generally speaking, yes.

Right.

All things being equal.

All things being equal. 9 times out of 10, that's what we were seeing in the data. Yes. The difference is the start point.

Right.

So looking at the, you know, the slide here, So we'll cut to the slide. You guys did an analysis, 2019, '18, 2015, 2014.

Right.

4 different model years looking across, you know, several different makes and models of Chevy.

Trying to find things that was similar.

Similar use case, right? And just kind of getting an idea of, you know, what's their CFV counterpart versus an EV. Right. Now, obviously, they're changing the model lineups all the time. Some of them are pure EV. They don't have a CFV counterpart.

Right.

And vice versa. But this first one I really love was, so a 2019 Chevy Spark in 2024, that's a 5-year-old vehicle.

Right.

Will have retained 72% of its residual.

Which is quite great performance. That's insane.

Yeah. Right, that's really high.

That's good.

That's good. Even then, if we go across the board, right, like a Chevy Trax CFV retains 60%. And I'm not going to hit these other ones because they're EV. Right. So somewhere, if you just assume that a 5-year-old vehicle will retain somewhere between 50% and 70% of its— Yeah.

Yeah, I mean, look, on KBB's list, and you guys will have to take my word for it, but I read it annually, what the top 10, and they do 5-year-old vehicles, they do. I mean, if you're coming in at 5 years over 50%, you're doing great. You're doing great. 60%, you're a winner.

So this is Edmunds. This is KBB. This is NADA. We're looking at actual resale values, or at least resale estimates, based on— fairly trusted industry sources that are looking at actual resale values.

Right. Right. And this slide here is from Edmunds. But again, you'll see similar data, right?

Yeah. Let's go down to 2015, right? So this is an almost a 9-year-old vehicle.

Right.

And at 9 years old, that Chevy Spark, you know, it's an LT. So there's no trim difference between these two comparisons, right? When we compare the Chevy Spark LT versus the Chevy Spark EV.

EVLT.

Yeah. We can see that the EV here— let's see if I can get my mouse pointer working.

And while you're doing that, real quick. So if you see his screen, it says CFV. We use that to mean conventionally fueled vehicle. We don't use ICE because frankly, hybrids and hydrogen is an internal combustion engine, right? And then you see BEV, battery electric vehicle. That should be pretty obvious what it means. We don't like to use ZEV because as we just said, there's no such thing as a zero emission vehicle. And so we're not going to pretend that it does exist, right?

Well, and we want to be clear too. It's a battery electric plug-in hybrid.

That helps make it clear, right? Yeah. Sure, if it said ZTEV, those do definitely exist, zero tailpipe emissions. In fact, there are no tailpipes on those vehicles.

So that's even more funny. Right, so OK, so we're looking at right here, we've got a 2015. This is a 9-year-old vehicle.

9-year-old.

But the CFV has retained 47% of its residual value. The battery electric version of the same vehicle has retained 29% of it.

Right.

Now, assuming they started at the same point, that would be a stark enough difference as it was. But here's the other kicker, right, is that at MSRP, that CFV only costs $15,000.

Right.

Battery electric costs $26,000. Right. Same trim.

Right.

The only difference is the power plant.

Exactly.

Now you'll say, but Mark, don't we get a $7,500 tax credit?

Not if you're a government fleet, right?

If you're a private fleet, if you're a corporate fleet, yes, you do.

Sure.

Right. So that would cut off some of that. Yeah, it would immediately. Yeah. You know, that would drop it significantly.

Yeah.

But yeah, if you're not a taxpaying entity, you don't get tax credits because there's nothing to credit.

And I want to pause here, right? Because for the same folks who are going to be yelling at us on the comments that says, you know, but these are going to get cheaper as they get older. And, you know, and yeah, they might. They might.

Yeah.

But also as they normalize, there's not going to be those tax credits.

Yeah. And well, and think about this too. Like you think about a conventionally fueled vehicle, that technology has been around a long time.

Yeah.

When has it ever gotten cheaper?

Never.

Okay. So just keep that in mind.

Just keep that in mind.

Yes, the technology might get cheaper, I doubt that the OEMs are going to suddenly start charging you less.

Yeah, I mean, you know, it's close to parity.

Capitalistic folks. Yeah, right. That's the system we're in.

Yeah.

So yeah, so that's obviously a big difference. You know, and we kind of see that across the board. If we compare the Trax versus the Bolt, 60% versus 38% in a 5-year-old asset, you know, and then we actually start losing data in older vehicles because some of this just— they weren't around 5 years, you know, 10 years ago. They're new. —right. And others, they actually stopped— like the Spark, they stopped making that in 2018. Yeah. So we don't see this.

So we don't have a model year for that, right.

So we go through, we do all this data. We look at, OK, depreciation across. Let's try to normalize this as much as possible. We're just giving you some examples. You may have Nissan Leafs. You may have others.

Right, exactly.

You're going to see a similar story across the board. Comparing like for like. Yeah, obviously, they don't have a CFB version of the Leaf. Right. But they do have a Nissan Murano or something. Yeah, exactly.

Find a fixer. Something compact. Sedan, that's a good comparison to a LEAF. And you will find similar information. And one of the ways you can do that is, if you're like me and you're a nut for the detail, you can get into the specs. How much legroom is there? How much shoulder room is there? How much cargo volume? So you're really comparing apples to apples.

And Mark is a nut for the details. So you can trust that he's done that. So let's— all right. So depreciation, yeah, they cost more. They don't retain their value. All right. Think about all the money we're saving on fuel. Right. Okay. According to fueleconomy.gov, right, this is the EPA's own website, right? That's— so we're using national fuel averages, we're using national electric charge averages. Correct. Using the same miles between both, right? 15,000 miles annually. Correct. Which is very high for a fleet. It's very high, but we're using it just to make sure we're—

if you're west of the Mississippi, it's decent number for retail customers. Yeah. East of the Mississippi is probably closer to $12,000, $13,000. Right. But fleets, you know, in most cases, delivery fleets and things like that, I'm not saying in every— but if you're a government fleet, if you're getting $6,000 out of your assets, you're doing great. Yeah. You know, so.

So if we talk about fuel and $15,000, by the way, too, that also benefits EVs. Correct. The more you drive it, the more money you save. Correct. And so just keep that in mind as we're looking at this. This is slanted to help the case of EVs. Correct.

Intentionally.

We're looking at this to make sure that is this right? Right. Is this— are we being fair? Yeah. Right. So average fuel cost. And I, you know, had to kind of double take on this one. The average fuel cost for, you know, let's call this because we've got data across this row. Yep. 2015 model year. This is a 9-year-old vehicle. Yep. Average fuel cost for a CFE Spark, $1,550. Right. Right. So $1,550. Yeah. To fuel that up. Now, it's very fuel efficient. It's very fuel efficient.

It's a subcompact or a compact sedan, right? So it's going to— it is not going to be my Raptor.

Right.

It's not your Raptor.

It's not my Raptor.

It's not my Armada, my other vehicle. Right.

I might need to switch cars. Yes. Nice. Right. And you compare that to the EV, which comes in at $650 per year. Right. So on average, you are saving $900. Yeah. It's good as $900 per year. Right. Per vehicle, right, that you own, right? So that's okay. $900, that's definitely something. If we compare like the Chevy Trax, that's $1,800 versus the Chevy Volt plug-in hybrid, that's $1,100. Ford C-Max comes in at $1,350. But across the board, you can kind of see that like CFEs definitely cost more in fuel. No question. Electricity is definitely cheaper. Right. And I would argue that it probably does put out fewer greenhouse gas emissions than combustion engines. Oh, it definitely does.

Right. It doesn't put out zero like we like to pretend, right? But it definitely puts out less. There's no question. Except maybe in like a 90% coal state, then there you might actually not be putting out less emissions.

But yeah, in most states, all burning oil, right? You know, which a lot of people don't know that, but back in Europe there's still a ton of oil power plants.

Yeah, I mean, when we— and again, I'm not trying to knock anybody, but some, some folks like to put China and other parts of Asia like on a pedestal because they have such a high percentage of EVs. And it's like, yeah, but they make 87% of their electricity with coal. It's like, please China, stop using EVs. Please, please stop. Go back to gasoline engines. You know? But that's another time. Or else the truth. Yeah, another time.

We'll bring you back to that one. 'Cause I do, I've got an answer for that. Yeah. It's just really expensive. Yeah. So, okay, so fuel, we definitely save some money on fuel, but it's not zero. It's not zero, right? Like, this doesn't cost you nothing to charge your vehicle. There is a cost to charging your asset. Correct. And you have to look at, you know, this is when do you charge it? How often are you charging? How many things are you charging at the same time? All that stuff plays into this. This is a national average. We're just comparing apples to apples here. Right, right. Okay. Let's go to the next one, because the next question is, yeah, but Mark, I don't have to change the oil anymore. That's true. And there's less moving parts, so it has less maintenance. In theory. Well, let's talk about that. Yeah, let's do that. So Chevy Spark, let's look at some of these newer vehicles, right? Yeah, a newer vehicle, Chevy Spark, $1,291. Yep. Trax is only $714. That's actually really nice.

Yeah, that's in year 1 of an '18 model, right? Year 1 of a 2018 model.

Right. But you look at the Chevy Bolt, so just comparing the Bolt versus the Trax, that actually cost me more at M&R. That's weird.

Which is very weird.

But again, the Bolt is almost identical. Why aren't I— I'm not seeing my savings. Right. Unless I'm comparing it to the Spark. But then you look at a 2-year-old vehicle, a 2018 model. And the Spark's only $307. Bolt comes in at $199. That's nice. $295. So it's kind of even. That tracks, man. Holy cow. That one got me in the second year, didn't it? Yeah, it did. In the third year, the Spark definitely cost me more. Oh, but look at this. They're almost all $1,700 except for the Ford. I don't know, Ford, you're killing me. You're supposed to be the stalwart. I was rooting for you. By year 4 of a 2018 or a 2008 model, again, kind of holding steady, you know, $507,000, $578,000, $216,000, $535,000. It's kind of interesting just how steady that is. There's not a huge dip in the M&R.

Right.

Now, this is something when I first saw it, I was like, okay, we missed something. The story is that there's way less M&R costs, right?

But so then you checked it. Then we checked it.

When you think about the leading categories of M&R in an asset, right, the number one cost driver for any asset is fuel. That's right. Number two, code number 17, old 17, tires. Tires.

And that's interesting, right?

Yeah, because EVs still use tires. They do still use tires. That's fascinating. So that cost didn't really go away. In fact, what we found is that EVs go through tires faster. Yep. And because of their speed rating and the torque rating they have to deal with, because it is— they've got a lot more torque they're dealing with. Right. They're a lot more expensive.

They're generally more expensive, at least when you're trying to compare those apples to apples like that.

Again, these types of vehicles— stock OEM tire versus stock OEM tire. Correct. Yes. Yeah. Now you could, I guess, replace the stock OEM tire on a Spark CFV with a nicer tire. Yeah, you could. And then your cost would be null. But then you're just spending money to spend money. Correct.

You know, with the EV, because I think we're being fair. Yes. Because I think with the EV, the factory is recommending this kind of tire. And there is a safety element to it, right? It is a stiffer tire. And yet it does burn down quick. I'm seeing it with my EV right now. So I think that's a fair comparison.

My Raptor also burns down tires, but I don't think it's for a very different reason.

Yeah. Yeah, and I think you got an off-road tire and you're driving it on the street a lot.

Yeah, it doesn't help. So, but when you look at that and it is, and you think about the, just the mechanics of an EV, right? They're using the tires. You talk about the regenerative braking, right? It's not coasting, it's actively charging the vehicle, which puts friction on the opposite side of the tire. Correct. Right, as it's slowing down, there's drag. Right. And then friction as you accelerate and it's having to deal with a lot more torque. Right. Than a CFV. And so, right, which we love. We love the, you know, the extra torque in an EV. Yep. But it does mean that you're going to go through tires faster. You are. And they're more expensive. OK, so that's the number 1 cost. Number 2 cost, code number 13, brakes. Brakes. And we're not talking about Chevy Tahoe brakes. Correct. Yeah, these are sedans and things like that. Right. But brakes, definitely, they cost more from an EV standpoint. It's interesting because the regenerative braking actually helps you here. You don't go through brake pads as fast.

Right.

When you do have to replace a brake, especially if you've got a hub-mounted motor, right? It's, you know, that's out on the ends.

The labor on that is intensive.

It's completely different than just changing out your brake, your pads and rotors, right? I know if it's an axle-mounted rotor or, you know, it's, it's further up line and it's away from the hub assembly, then it's a little more comparable, right? But still something you have to deal with, right?

Um, I, I think we have to call out PMs too for a second here. Okay. Yeah, right. Like we always say, and you, what's your line? You say the most—

My favorite line is the point of a PM is not to change the oil, it's to find something wrong. Right. If you're not finding something wrong during a PM, you're doing it wrong. You're probably doing it wrong, right? It is, it's the inspection.

It's the inspection, right? And you know, every seasoned fleet manager will tell you that. I've never come across one who wouldn't tell you that the most important part is inspection. You're trying to anticipate future work, you're trying to prevent something major failing. And so, you know, will intervals change? Potentially. But especially in a fleet setting, potentially not all that much, right? Especially as more recent vehicles' technology have already pushed out PM intervals, right? So I'll just say this one quick. If you're still using 3,000 miles in 3 months, it's like, ooh. I mean, like, at the bare minimum, fleets are using 5,000 miles in 6 months. And, you know, again—

Heck, the Ford F-150, I think stock is 10,000. Exactly. Like, they're pushing that. And now they're using, like, oil life meters and stuff like that. So you go even further. Yeah, I mean, I haven't—

You know, I'm not— I'm out of operations now for a few years. And when I was buying Transits, it was 7,500 miles, right? So if we're being honest, this is pushing out further and further. But you still need— it's still a good practice to perform an inspection periodically on this asset because, you know, just like on any other vehicle, something could be going wrong. And so there's going to be some PM costs even if you're not changing the oil. It shouldn't be less in theory.

Yeah, but the, the biggest driver of a PM cost isn't the parts and the oil, right? It's the time. It's the labor. And the time to inspect a vehicle is the time to inspect a vehicle. Now there's fewer things to inspect for sure, because you don't have to pop open the hood and check all the engine belts and hoses and everything. But you still have to, you know, check door latches and seats and steering wheels and all the other components that exist. And they're all common, right? All you did was eliminate the power plant, right? And shift it from under the hood to under the cab. Right, right. Because, you know, when you think about where that motor sits, usually they're sitting under the cab, and then you got the battery pack. Yeah.

And we don't want to undersell that. Like, we, we get that that's— when you say, well, you did— like, we get that that's a big did. But let's think about when do we see those, um, components become problems. Is it in year 1 and 2 and 3? It's later in life, right? And so, you know, Certainly for most people, when they're replacing vehicles, they're not going to come across those big ones. And if we're being honest, with the exception of a few vehicles that have been around a few while, we don't really know fully the later in life things that we're going to be dealing with. I think most people estimate reasonably that there's going to probably need maybe changing the battery. And at time zero today, it's probably not worth changing a battery on most of these assets.

Most of them are throwaway. It works— the Tesla and all that stuff, they're not recyclable. Throw them away instead. And it's, it's really sad because you could. It's just not worth the squeeze. It's just the cost. And the cost doesn't make sense to recycle. It's cheaper to go mine it out of the ground than it is to pull it out of a battery that's already been manufactured.

Yes, exactly. Just nuts to me.

Right. You'd think it's like, it's right there.

Yeah. So much so that, you know, quick, quick tangent, but it's connected that when we're modeling this for very large assets like transit buses and things like that, when we're building replacement plans for them, we actually usually will essentially create a dummy asset for the battery itself. Right. Yeah. So that you can model because, because of the expense of that vehicle and all the components, maybe you can't just replace it in 10 years. You're going to need another battery. So you model that, that cost. So the point of trying to get here, bringing it back, is, you know, power plant issues become more serious later in life. And so this idea that this fallout is going to happen because there's less moving parts, I get it, but we didn't think that through all the way, if, if that makes sense, because yeah, there's less moving parts, but it's not like those parts are generally failing in a major catastrophic way when they're young.

When we look at BMS code and failures and repairs, you know, Code 45 power plant, we just don't see a ton, right, out of 45. We see it and it's expensive when it happens, right? So like the cost per occurrence is high, right? But compared to tires and brakes and every other thing. Because you think about it, what else do you still have on an EV? Glass. Right. Doors. Yeah. You're going to have to deal with paint and paint chips and damage and dents.

That all exists. A window is going to get stuck still.

The infotainment system.

The infotainment system is a big one.

And EVs actually kind of pushed the mode forward on this because infotainments in traditional vehicles typically were a little less sophisticated. Correct. And now, like you're seeing, they're seeing them catch up. They're bigger and bigger screens, nicer screens, more of the— functionality is getting shifted into the infotainment system. But it's integral in an EV. It's integral to the operation of that vehicle, which makes it more complex, harder to deal with, disassemble. I mean, you're talking about trim pieces. It's just different. It's more expensive. It takes more time. And time is your most expensive driver for them.

Labor on that, right? Yeah. I mean, to your point, I have one of my vehicles, the lights are out on my old rotary-style RPM. And speedometer, and I'm just not going to fix it. On my EV, it's a screen.

If it goes out, it goes out.

I have to fix it. Now, if it's on the warranty, great. But what happens when it's not on the warranty, when my powertrain warranty— excuse me, when my bumper-to-bumper is out? Either I got to get rid of the EV or I got to fix it. And it's going to be a pretty big cost. So I think that we're being fair here. I think we are. And again, generally speaking, if you're a well-run fleet, most of the time, those big component failures you should be replacing that asset before you're hitting those big component failures.

Right. Like looking at 5 to 7 years, right? Typically before we're going to replace that. Yeah. And even if they do have a component failure, the rest of the asset's still good. Exactly. Just you change out the motor, you know, a crate motor, you're looking maybe somewhere between $3,000 to $10,000 depending on the motor. Right. Obviously, if it's a big Cat or Cummins. Yeah, it's— it could be different. Right. You know, you're just— you're not dealing with a crazy— it's not impossible. It's not out of the realm of possibility, especially if it's a fairly expensive asset. Right. But for an EV, you have a battery problem, you have a motor problem. Motors you could swap out, but the battery has proven a little bit more difficult to where it's almost like, nah, it's just worth it to total it, have an insurance claim, and start over.

And again, that may change. Hopefully.

I hope it changes.

This is the way it is today. And if we're being honest, it's not changing next year or the year after that. It's going to be a while.

Not unless somebody comes out with that skatepack system like Rivian was playing with. Yeah, there's a couple others that have been—

There's some cool ideas. And you also need to have convergence in the industry where everybody's using the same stuff, essentially, right? Same, same thing. Yeah, right.

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