Roeth: Bespoke is the word

I think bespoke might be my new favorite word. Typically, it is used to refer to clothing that is tailored for a specific person. A broader definition is custom-made, and synonyms include personalized, made to order, customized. You get the idea.

Emilia Sibley, NACFE’s emerging technologies consultant and lead author on our latest report, Forecasting the TCO of Powertrain Alternatives: The Messy Middle Cost Report, used the word in the report saying that total cost of ownership (TCO) must be a bespoke calculation for each fleet. In other words, there is no universal TCO. Therefore, fleet managers must build a TCO analysis that is tailored to their fleet-specific routes and costs. What works for one fleet could be a financial disaster for another fleet.

We designed our report to guide fleet owners through the financial realities of transitioning to alternative powertrains for diesel/renewable diesel/biodiesel, compressed natural gas/renewable natural gas, battery electric, and hydrogen fuel cell.

There are a variety of factors that we identified that should go into the TCO calculation. Many of them are highly variable, such as local electricity rates, fleet-specific infrastructure strategies and negotiated vehicle prices, routes, loads, terrain, etc. Relying on general national averages could lead a fleet down the wrong path, so a custom TCO analysis is the best path forward when it comes to determining which, if any, alternative-fueled vehicles make economic sense in a fleet’s operation.

Our report contains a pre-analysis checklist and a step-by-step process fleets can use to analyze which powertrains make sense in their various duty cycles. Fleets need to establish a true diesel cost baseline, map high-opportunity geographies, match the powertrain to the duty cycle, gather real-world quotes and build the equation, determine residual value assumptions, assess total operating economy, estimate a parity point, and stress-test the parity window.

In addition to concluding that TCO is bespoke and not universal, our report found that battery-electric vehicles are the long-term economic winners, return-to-base drayage operations are the “Goldilocks” lanes, diesel’s financial advantage is finite, CNG/RNG is the near-term hedge, and FCEV’s niche is defined by speed and payload.

We hope that this report brings fleet clarity when it comes to determining the TCO of the powertrain options available to them. For fleets that are also focused on sustainability, our next report, From Source To Highway: The Messy Middle Emissions Report, will move beyond simple tailpipe observations to adopt an informed Well-to-Wheel perspective that integrates well-to-tank, tank-to-wheel, and greenhouse gas emissions as well as criteria pollutants. Look for that early this summer.