EV Switch Will Hinge on Cheap Power Despite NatGas Swings


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   SECAUCUS, NJ (DTN) -- For years, the commercial electric vehicle 
conversation was focused on overcoming technology hurdles and dampening high 
purchase costs with incentives. Now, the relative stability of wholesale power 
prices regardless of the swings in natural gas could decide if a fleet goes 
electric.

   With federal and state tax credits drying up and battery technology 
maturing, fleet operators are focusing their investment decisions on Total Cost 
of Ownership (TCO), prioritizing the low maintenance requirements and 
predictable fuel expenses that EVs offer.

   The cost of EV fuel electricity is not completely insulated from the energy 
market, but it provides immense relative stability compared to diesel.

   The stability argument holds because commercial electricity is heavily 
shielded from the volatility of its primary feedstocks. Diesel at U.S. pumps 
cost 9% more than a year ago at $3.837 gallon but natural gas futures are up 
33% since November 2024 at $4.48 mmBtu.

   While natural gas is used to generate roughly 40% of U.S. power and the 
Henry Hub spot price is up one third from a year, the regulated price of power 
for commercial customers has moved up only 4% on the average over the same 
period to 14.2 cents kWh nationally, U.S. Energy Information Administration 
data shows.

   The strongest business case for EVs emerges when managers hedge against 
diesel's volatility as the fuel's price is intrinsically linked to vulnerable 
global crude oil markets.

   In a crisis scenario, the price increase for diesel is typically far more 
immediate and extreme than the corresponding, dampened increase in commercial 
electricity rates.

   If the cost of diesel starts at 20 cents per mile and electricity at 10 
cents per mile, an energy crisis might push diesel to 35 cents while 
electricity only rises to 12 cents per mile. The savings margin for the 
converted fleet has widened from a prior 10 cents to 23 cents, after adding the 
13-cent difference in crisis pricing.

   TCO studies show that refueling the Ford F-150 Lightning pickup truck with 
diesel costs approximately 15 to 24 cents per mile, versus two to 20 cents per 
mile cost for electricity.




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