Finance the system, not the truck: four lessons on financing electrification

How to finance? · Field notes · 3 min read

Financing electric fleets the way we financed diesel trucks doesn’t work. Four lessons from our session on financing electrification with F&L, Smart Freight Centre and D2XCEL.

In June, F&L (The European Freight and Logistics Leaders’ Forum), Smart Freight Centre and D2XCEL hosted a session on financing electrification, where we presented EUlectrify’s point of view and a case study. Four lessons stuck with me.

1. CapEx or OpEx is a strategic choice

There is no universally right answer. It depends on what kind of company you are, the industry you operate in, the strength of your balance sheet and how much risk and flexibility you want. Think it through strategically, and set clear guidelines before the first quotes come in.

Asset life matters too. Chargers, software and batteries age and evolve at a different pace than the truck itself. Combining CapEx and OpEx per component can lower the risk of being stuck with outdated equipment.

“We are buying and running logistics as part of an energy system. You need a point of view on the whole EV stack. That is where the money is made.”

Haijo Kampinga

2. Finance the energy system, not only the vehicle

We are no longer just buying and running trucks. We are buying and running logistics as part of an energy system. The value, and the money, sits across the whole EV stack: vehicle, charging, grid connection, energy contract, software and services. You need a point of view on that whole stack. Which carrier will appoint the first Chief Energy Officer?

3. Start smart

Thinking big is not the problem. With the right partners, scaling fast, in step with your customers, competitors, technology, legislation and infrastructure, shouldn’t be hard either, if you have a robust strategy and plan. The hard part is choosing where to start smart: which technology first, which foundations you need to be resilient and scale, and which transparent financing solutions carry the lowest cost and risk.

4. Collaboration, collaboration, collaboration

Think in ecosystems, and include your finance people and partners early. Consider participative models behind the meter, where operators, landlords, energy partners and financiers share the investment and the return on site. Grid operators will need to allow these models. They are a critical enabler of reliable and affordable depot charging.

Coordinated demand helps too. Imagine three logistics operators bundling demand for 40 eTrucks and shared depot charging in one procurement process, with multiple vetted suppliers and financing built in. Bundling gives buyers more weight in the market, gives suppliers clearer volumes, and creates a stronger basis for pricing and financing discussions.

Heavy CapEx is a planning problem

Our earlier insight on avoiding heavy CapEx sets out five practical routes: segmenting fleet and infrastructure route by route and depot by depot; bundling vehicle and infrastructure financing; pay-per-use models; sharing residual-value risk between operators, OEMs, lessors and financiers; and combining CapEx and OpEx by asset life. The conclusion still holds. Heavy CapEx is often not just a financing problem. It is a planning, contracting and risk-sharing problem.

Thanks to Willem Bulthuis, Thomas Bouwman and Philip Evans for organising and hosting, and to all participants for the discussion.