Charged up: Financiers prep for the EV future

Commercial EV financiers and charging manufacturers are aiming to meet customer needs in the transportation industry as new regulations loom. 

The California Air Resources Board and the Environmental Protection Agency enacted updated nitrogen oxide (NOx) emissions standards that will place new restrictions on commercial vehicles beginning in 2027.  

To help meet the charging and infrastructure requirements that those units have and meet customer demand, commercial financiers have embraced charging-as-a-service (CaaS), John Critelli, director of sustainable development group sales, mobility solutions at Mitsubishi HC Capital America, told Equipment Finance News.

“When we look at charging-as-a-service, we look at that as an added value service product, so it fits neatly and nicely into our corporate mid-term and long-term plans,” he said. “If our customers are demanding a charging-as-a-service solution to meet their net-zero-emission goals, we want to help them.”

Mitsubishi HC Capital America has partnered with commercial vehicle charging manufacturer Electrada to provide CaaS financing for vehicle OEMs, Critelli said. Cincinnati-based Electrada also partnered with Daimler Truck Financial Services as it looks to further expand electrification for its trucks. 

Customers of Mitsubishi HC Capital America and Daimler Truck Financial Services can bundle Electrada’s charging system with their monthly truck financing payment, Electrada Chief Executive Kevin Kushman told EFN. 

Wells Fargo partners with ChargePoint 

Mitsubishi HC Capital America is not the only company engaging in CaaS. Wells Fargo has partnered with Campbell, Calif.-based CaaS provider ChargePoint to finance charging equipment for dealers. ChargePoint’s eSkid charging system offers a dual-charging portable setup that can adjust to dealership and fleet needs. 

Matt Fitzjerrells, senior vice president and national sales leader at Wells Fargo Equipment Finance, told Equipment Finance News that the lender is looking to streamline the financing process for dealers. 

“Mr. Dealer, not only are we going to give you this fully installed, bundled package, we’re going to give you a very easy process to finance that if they choose to do that,” he said. “If that interest is there that they want to finance, [ChargePoint will] connect the dealer with us. It’s really on them to push that out there, to roll that out there, and then we connect with the dealer and let them know how simple the process is.” 

Through the bundled solution, customers have variable financing terms options, according to a Feb. 28 release from the lender.

In addition to ChargePoint and Electrada, companies like WattEV and Zeem are expanding electrification infrastructure ahead of the new emissions standards.

Commercial EV challenges 

The adoption of 2027 emission standards is forcing the phase-out of non-compliant vehicles and placing pressure on the entire transportation industry to prepare for compliance — including meeting demand, Brian Antonellis, senior vice president of fleet operations at Fleet Advantage, previously told EFN.   

“In our industry, they only make about 300,000 trucks a year, so if you’re going to pull forward and order more trucks in 2026 than you typically would, then they’re going to run out of availability,” Antonellis said.  

“We’re going to go right back into the same position we were in during COVID, where demand is extremely high, but the ability to produce trucks is stagnant, so demand exceeds supply, prices go through the roof, and we get ourselves into a very challenging market.” 

Current year-over-year truck inventory levels sit similarly to levels at the height of the pandemic, according to data from Sandhills Global. 

Demand uptick proves need for infrastructure 

While OEMs continue to see commercial EV sales pick up to meet the emissions standards, dealers and fleet managers must build out charging infrastructure home hubs, Kushman said.

Daimler reported sales of 648 battery-electric vehicles in the second quarter, up 69.2% YoY, while Daimler Truck sold 112,195 total trucks and buses in Q2, down 14.9% YoY, according to Daimler’s earnings release. Across California, EV sales were up 234% YoY in 2023, according to CARB, putting further pressure on charging infrastructure. 

“Eighty-five percent or more of charging in the commercial environment must happen at the home location of those vehicles, and not asking them to go charge in the public on random available chargers they pass on the road,” he said. “We just think that’s a recipe for reliability problems.” 

Charging infrastructure remains a significant hurdle, according to EV technology provider Xendee’s 2024 Commercial EV Charging market survey, released in June. 

Seventy-five percent of charging infrastructure stakeholders questioned for the survey listed grid limitations as a significant commercial EV charging roadblock. And 63% said the total cost of infrastructure is a significant obstacle, according to the survey. The survey had 172 qualified respondents, according to Xendee. 

Serving the right markets 

As the need for commercial EV infrastructure grows, some vehicle classifications represent stronger markets, Kushman said. 

Class 4 and 5 vehicle represent the sweet spot between mileage and a fuel efficiency for commercial EVs, he said. “When we electrify those routes, the total cost of ownership impact is great.” 

The total cost of ownership and transportation are key components in EV adoption, despite the pressures of emissions standards, according to Ryder System’s qualitative analysis of the markets published May 8. The total cost for an EV to transport still exceeds diesel vehicles across every vehicle classification, and especially the heavy-duty market. 

According to the Ryder report, it costs:  

• 5% more to transport for light-duty transit vans;   

• 114% more to transport for heavy-duty tractors; and   

• 67% more to transport for an all-electric mixed fleet consisting of 25 light-duty vehicles, 25 medium-duty vehicles and 25 heavy-duty vehicles.   

As costs are much higher for heavy-duty vehicles, the commercial EV market continues to prioritize the more cost-effective, light-duty and medium-duty, commercial EVs. As a result, there are limited opportunities for commercial EV charging for Class 7 and Class 8 heavy-duty tractors, Wells Fargo’s Fitzjerrells told EFN. 

“There just haven’t been as many opportunities in the in the class 7 and 8 [space], and a lot of that is backed by the OEMs, because that’s their product and their finance company,” he said. “We’ll look at those, but most of the conversation has been around the Class 3 to Class 6.” 

Changing EV, financial services markets 

While a secondary market for commercial EVs should develop as more units enter the market, the development of that market also presents the issue of a potential secondary market for commercial chargers, Mitsubishi HC Capital America’s Critelli said.

“You’ll see a secondary market for BEV’s, Fuel Cell EV’s and hydrogen trucks, but we’re just not there yet because it hasn’t been around long enough,” he said. “With Commercial EV Chargers, there is no secondary market, so what’s going to be interesting is, will that ever develop”.

The more than 50% projected decline in costs for the commercial EV units by 2030, according to research firm Statista, also provides reason for optimism, Salim Youssefzadeh, CEO and co-founder of charging and Class 8 electric truck provider Watt EV, told EFN.

In addition to charging depots and chargers in four California locations, WattEV has developed a truck-as-a-service program to facilitate owner operators’ transition to EVs. The company has tested BYD, Daimler, Volvo, Nikola, and other units, as part of its 30 unit fleet in California, Youssefzadeh said.   

“From an economics perspective, over the long term we are seeing the price of infrastructure coming down as well as we anticipate the cost of the trucks long term to start coming down,” he said. “That may not be the case today, but in the future, we do see it going in that direction.”

CaaS, TaaS future

CaaS and transportation-as-a-service emerged as customers sought more holistic services from finance providers and those customer expectations continue to bring change to the financial services industry, Mitsubishi HC Capital America’s Critelli said.

“Our customers are demanding more and more out of financial services companies to provide creative finance solutions outside of the traditional loan and lease,” he said. “We come from a world in financial services where we’ve become accustomed to having to do it all on our own; we originate, we fund, we book, we bill, we collect, and it’s end-to-end financing.

That’s going to change, so the time has come to embrace that change in order to deliver solutions that our customers are demanding,” Critelli said.

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