DETROIT (Reuters) – Supply-chain bottlenecks and broader price inflation have temporarily reversed the steady decline in electric vehicle battery prices and are keeping the costs of clean trucks higher than diesel vehicles, the CEO of electric and fuel cell truck maker Nikola Corp told Reuters.
“Battery cell costs … have declined every year for the past decade. This year is the first year they went up,” Nikola CEO Mark Russell said in an interview broadcast at the Reuters Next conference on Thursday.
Nikola and its commercial truck partner, IVECO, have begun assembling the first of Nikola’s Tre BEV trucks, and are still expecting to begin regular production of those battery-electric trucks in the first quarter of 2022, Russell said.
Demand for electric and fuel cell trucks is strong, Russell said, but the key to wide adoption of clean alternatives is for battery and fuel cell vehicles to cost less to operate than conventional diesel trucks.
“We are very close to those lines crossing if you look at the total cost of ownership, even without incentives,” Russell said. Supply-chain bottlenecks and inflation have slowed the convergence of battery and fuel cell technology costs with those of diesel, he said. “I believe that’s temporary.”
Still, Russell said rising prices are a challenge for Nikola, which is a money-losing startup facing increasing competition from well-capitalized incumbent truck manufacturers and rival newcomers. In August, the company cut its financial outlook for the year, citing supply chain problems. The company’s volatile shares are down 33% for the year.
“It’s really a rotten time to have the costs go up,” Russell said. “An inflationary environment is very difficult for everybody, and especially manufacturers like us that have parts that have a very long lead time. And especially when we are developing so many of the parts from scratch.”
Looking beyond near-term cost pressures, Russell said demand is strong for all commercial trucks, but especially trucks that do not emit carbon dioxide and other pollutants.
Public companies and facilities such as ports that have large carbon footprints are under pressure to make good on commitments to cut emissions. Governments are increasing incentives to subsidize clean truck sales, and enforcing tougher curbs on diesel emissions that drive up the cost of existing technology.
Russell said he welcomes more established truck makers and energy companies investing in clean vehicles and hydrogen refueling networks.
“We are trying to disrupt and displace a network of heavy commercial manufacturers and a network of global energy supply. It took a century for that infrastructure to get where it is,” he said. “Hopefully we can disrupt and replace it in less than a century. It will take a long time … many, many years. And it will take the help of everybody out there to do it.”
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(Reporting by Joe White in Detroit; Editing by Matthew Lewis)