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Forecasting the TCO of Powertrain Alternatives: The Messy Middle Cost Report

Run on Less – Messy Middle measured real-world performance from 14 Class 8 tractors operated by 13 participating fleets across four energy pathways: diesel/renewable diesel/biodiesel, compressed natural gas/renewable natural gas (CNG/RNG), battery electric (BEV), and hydrogen fuel-cell (FCEV).

The Forecasting the TCO of Powertrain Alternatives: The Messy Middle Cost Report is designed to guide fleet owners through the financial realities of transitioning to alternative powertrains by analyzing the Total Cost of Ownership (TCO) across all four powertrains. The report focuses solely on Class 8 vehicles, forecasts out to 2035, accounts for duty cycles and utilization and highlights the variables that matter when determining TCO. Critically, the analysis assumes zero incentives in its TCO calculations. This provides a worst-case scenario that reveals when parity occurs organically through technology improvements and operational savings.

NACFE’s mission is to help fleets invest in cost saving technologies that improve efficiency and reduce emissions. Taken together the three reports from Run on Less – Messy Middle on operations, total cost of ownership and emissions have brought clarity to long-haul. Using the three reports together should give fleet managers a clear path for making decisions on which efficiency technologies are best suited for their operation.

TCO must be a bespoke calculation for each fleet. Highly variable factors — such as hyper-local electricity rates, fleet-specific infrastructure strategies, and negotiated vehicle prices — mean that a national average will rarely reflect a specific fleet’s actual balance sheet.

Each powertrain option has its strengths and weaknesses.

There are some key findings about powertrains based on duty cycle.

Fleets must start by estimating all the component costs of the vehicle over its lifetime. Fleets must then combine and boil these costs down into the one metric that matters most to the bottom line: Total Cost of Ownership Per Mile ($/mi).

The basic math looks like this:

TCO Per Mile ($/mi) = [Total Capital Costs + Total Operating Costs] ÷ Total Lifetime Miles

To further break this down into the specific components discussed in this report, the equation looks like this:

TCO Per Mile ($/mi)
=
[Total CapEx (Vehicle Cost – Residual Value + Charging & Fueling Infrastructure – Incentives & Grants + Financing Fees)
+
Total OpEx (Fuel & Electricity + Maintenance & Repair + Insurance + Regulatory Penalties)]
÷
Total Lifetime Miles

There is no universal TCO. Fleet managers must do the work to construct a TCO analysis that is tailored to their fleet-specific routes and costs. Before making a procurement decision, fleets should conduct a custom TCO analysis rather than relying solely on general national averages. Factors to consider include fleet performance baseline, utility and fuel contracts, available incentives, and organizational financial specs.

A step-by-step process fleets can use to analyze which powertrains make sense in their various duty cycles should include the following: 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.

Study conclusions include the following:

  1. TCO Is Bespoke, Not Universal: There is no single date when parity is achieved. Parity is an operational window defined by a fleet’s specific geography, duty cycle, and costs.
  2. BEVs Are the Long-Term Economic Winners: Driven by a projected 45% drop in vehicle purchase prices and superior energy efficiency, BEVs achieve the lowest Net TCO across all modeled duty cycles by 2035.
  3. Return-to-Base and Drayage Are BEV “Goldilocks” Lanes: Regional RTB and drayage cycles offer the strongest immediate case for electrification, benefiting from high mileage routes and predictable depot charging.
  4. Diesel’s Financial Advantage Is Finite: The era of diesel as the undisputed low-cost leader is ending. Rising costs for emissions compliance, specialized maintenance, fuel price shocks, and insurance are creating a diesel cost escalator that eventually will push its Net TCO above zero-emission alternatives in every duty cycle.
  5. CNG/RNG Is the Near-Term Hedge: For fleets seeking a pragmatic, infrastructure-ready exit ramp from rising diesel costs, CNG/RNG offers the most mature alternative. While eventually overtaken by BEVs on a pure per-mile basis, its ability to match diesel performance in long-haul and weight-sensitive lanes makes it a useful bridge in the Messy Middle.
  6. FCEV’s Niche Is Defined by Speed and Payload: While currently the most expensive option, FCEVs represent a possible choice for high-VMT, heavy-haul OTR lanes where payload capacity and rapid fueling are non-negotiable.
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