What’s truck-as-service actually mean?

One of the new terms to look out for when buying EVs is ‘truck as service’. But don’t be taken in. Not all truck as service offerings are the same. Some are genuine disruptors - and some are old products dressed in fancy new clothes.

The idea of ‘truck as service’ follows in the footsteps of software as a service, or any other product that has moved from an ownership model to a rolling contractual agreement based on service rather than acquisition. There are pros and cons. The pros are it removes much of the responsibility and complexity from the end user – the product is eternally updated, serviced and owned by the supplier. All the operator has to do is run it.

Sound like contract hire? Well yes, in some cases. Some suppliers do indeed seem to be adding up all of the costs associated with running an EV, including insurance and charge point installation, minus the likely residual value and spreading that cost across the 48 or 60 months of a lease.

These leases will be far more inclusive in terms of cost than a traditional operating lease but in principle they are similar and term limited.

Volta’s truck as service offering includes all costs for a fixed term based on an eight-year TCO calculation.

The other more interesting models are calculated by usage.  Take your electric vehicle, pay a deposit perhaps so you don’t run off with it, but then your charges are automatically calculated per mile, or by charging cycle. Iveco is piloting a pay per use model in Italy with its GATE product.

Tevva is also offering pay per use.

These models will become more interesting over time as suppliers add in nuances and value adds to gain competitive edge. Who will allow seamless upgrades to the newest model? Who will start to structure payments by application so light, or heavy users get the most cost-effective deal for their operation? Who will be the first to offer payment holidays if the vehicle sits idle?

This pay per use model will remove the huge capital outlay for operators, although they will need the credit elasticity to match the payments. And these babies won’t come cheap. However, a pay per use model does allow the operator to match the cost of the vehicle much more precisely against its prospective revenue. 

A usage-based truck as service model would therefore be very useful to companies who need to have decarbonised vehicles for specific contracts – but are only guaranteed the contract for a short time, and don’t want to be saddled with super-expensive assets should it fail.

 

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