Sticker Shock as Postal Service Buys All-Electric Mail Trucks

After years of interest group wrangling, lawsuits, and bickering with Congress, the U.S. Postal Service (USPS) has decided to “go green” for their truck purchases. According to recent reporting by The Washington Post reporter Jacob Bogage, “[p]ostal officials’ plans call for buying 60,000 “Next Generation Delivery Vehicles” from defense contractor Oshkosh, of which 45,000 will be electric…the agency will also purchase 46,000 models from mainstream automakers, of which 21,000 will be electric.”

Fleet purchases will be almost solely electric by 2026, at a gargantuan cost. America’s mail carrier will spend roughly $10 billion on these trucks, which includes $3 billion in taxpayer funds appropriated by Congress. This spending sum marks a significant increase from the $6 billion initially slated for mail truck purchases by the agency. Unfortunately, these upfront costs will be just the start of a surge of red ink that would follow any mass electric vehicle (EV) purchase program. The USPS must reverse course and invest in a more reliable, diversified fleet.

Before pursuing an all-electric fleet, Postmaster General DeJoy would be wise to consult his own Inspector General’s (IG) findings on EVs at the post office. According to the report, an EV fleet would be more expensive than conventional trucks assuming, “an average delivery route length of 24 miles per day, and 301 operating days per year.” The key here is that EVs are approximately 11 percent more expensive up-front than their conventional counterparts, with cost recoupment possible down the road via reduced energy and maintenance costs. Down-the-road costs are discounted using a 2.2 percent interest rate, reflecting the common, reasonable assumption among regulators and financial analysts that a dollar held today is worth more than a dollar held tomorrow.

Even these assumptions may be too generous to electric vehicles. On page 7 of the report, the IG states, “[e]lectric vehicles are generally more mechanically reliable than gas-powered vehicles and would require less scheduled maintenance and reduced maintenance costs.” But, according to an in-depth analysis by analytical firm We Predict, “in a three-month time frame, EV service costs were 2.3 times higher than a gasoline-powered car. At 12 months, EV service costs were still 1.6 times higher. We Predict found service-related costs averaged $306 per electric vehicle, while a gas-powered car averaged $189.” For example, just replacing a battery in an EV can cost between $2,000 to $10,000, maybe more. Therefore, the assumption that EVs have fewer moving parts and therefore cost less post-purchase may not necessarily be true.

The IG notes that there are some scenarios where 20-year total ownership costs could be lower for EVs than gas-powered trucks, but only if we assume that, “electric vehicles have lower fuel and maintenance costs per mile.” And, even then, EVs would make sense on less than 10 percent of mail routes (in the 40–70-mile range). Finally, the IG notes that EV costs could be lower than gas-powered costs if Congress sufficiently subsidized EV adaption. This, of course, ignores the fact that any federal subsidies impose real costs on taxpayers and don’t lower the underlying expenses associated with EVs.

The $3 billion in taxpayer dollars already appropriated for EVs is just the tip of the iceberg if these truck purchases are a long-run money loser. And, by all indications, an electric fleet is an unsustainable fiscal feat. It’s unwise for the USPS to put all their eggs in one basket instead of purchasing a variety of different vehicles, including conventional car models used by mail carriers in more rural areas. An all-EV fleet is the wrong way to get America’s mail carrier back into the black.