While electric vehicle manufacturers slash prices to lure retail customers and increase their market share, EV costs in fleet and distribution remain elevated despite the sector accounting for 25% of CO2 produced in the U.S. every year.

By 2030, the World Economic Forum projects the number of delivery vehicles will increase by 36% in the top 100 global cities, despite the lack of availability in EV panel vans, heavy-duty trucks, and specialty vehicles like semi-trailers and buses.

Meanwhile, traditional automakers including Ford Motor and General Motors have joined EV makers Tesla, Lucid and Rivian in producing passenger EVs, sparking a price war that has benefited retail consumers but not commercial customers.

High costs

In an interview Hari Nayar, VP of fleet electrification and sustainability at Merchants Fleet, a fleet management and leasing company, said the high cost of available EVs in distribution is stopping logistics and transportation companies from electrifying their vehicles.

Other hurdles include the cost of infrastructure and general uncertainty about the quality and longevity of EV companies, particularly new original equipment manufacturers that lack established market recognition.

“Despite common belief, all data indicates that EVs are less expensive to own, operate and maintain over a vehicles’ lifespan,” he added.

While EVs are expected to account for 14-18% of U.S. electricity consumption by 2040, other advances in technology and energy efficiency are expected to reduce demand while vehicle supply increases, Nayar said.

Performance: EV vs. gasoline

Brad Jacobs, the VP of fleet consulting at Merchants Fleet told FOX Business: “While EVs have yet to reach cost parity with Internal Combustion Engine (ICE) vehicles from an origination cost standpoint, the prevailing thought is that EVs are more expensive.”

“While EVs carry a higher purchase price, the cost to operate the vehicle is up to 40% less than an equivalent gas-powered vehicle,” he explained. “To illustrate this, fleet operators say the most common instances of service prior to 40,000 miles are wiper blades, and perhaps a tire or two due to normal operating circumstances.”

At the breakeven point, where the operating cost savings overcomes the higher acquisition cost, Jacobs said most vocational EVs will reach total cost of ownership parity between 1.5 and 2.5 years in service.

“With most lifecycles being 4 to 6 years, the cost savings can be substantial, even after the charging infrastructure is considered,” he finished.